More requests than ever are expected this year to tap into a state program that provides money for counties adversely affected by oil development.

But with only $2.9 million expected to be available, "there is way more demand for money than supply," said Jeff Engleson, director of the state Land Department's Energy Development Impact Office.

"With all the extra oil activity over the past couple of years, it's worse than ever and there will be a shortfall," said Engleson, the person responsible for approving grants to counties affected by oil activity.

He does not have a total number of applications yet. Local governments in oil-producing counties have until March 27 to apply for the grants. The money is typically doled out before June 30.

Last year, Engleson approved about $3 million to local governments in western North Dakota's oil-producing region. About half the money was designated to fix township roads and bridges torn up from heavy truck traffic, he said.

A total of 278 government entities submitted oil impact grant requests of more than $29 million last year. Engleson approved 265 requests in 15 oil-producing counties.

The grant program has given away grants totaling more than $61 million since it was started in 1982.

The funds come from part of the state's 5 percent oil and gas production tax. The Legislature raised the cap from $5 million to $6 million during the 2007-09 budget cycle.

Legislators from oil-producing counties are proposing to increase the cap.

"There are various bills dealing with the issue that are still out there hanging," Engleson said.

One bill would add $5 million to the program this year, Engleson said. "But it's not nearly enough to cover all the needs they got out there," he said.

Gov. John Hoeven's budget recommendation for the Legislature would increase the cap to $20 million during the 2009-11 budget period, Engleson said.

Engleson said he will travel throughout western North Dakota in the coming weeks to assess damage to roads and bridges and he'll attend community meetings to decide how he'll divvy up the grant money.

He already knows what to expect.

"There is going to be one more year of damage to county roads and people will be asking for more money than ever," he said.