NT agricultural water licence revoked

The Northern Territory Health Minister has cancelled a 10 billion litre per year water licence for a Top End farming project after a review found the original assessment didn't consider climate change and used the wrong allocation rules.

The 12,780 acre Larrimah Agricultural Precinct, about 400km southeast of Darwin, was being spruiked for development by the NT Land Corporation.

It secured a groundwater extraction licence for the project after the NT Department of Environment and Natural Resources assessed the area.

The site was suitable for a wide range of irrigated crops, including mangoes, citrus and melons, the NTLC said in an advertisement late last year

But that plan could be in jeopardy after Health Minister Natasha Fyles revoked the water licence, saying a new approach to the irrigation project needs to be found.

"In this transitional zone, the advice I have been given is that the appropriate approach likely needs to be determined on the basis of the (Katherine-Tindall) aquifer characteristics," she said in a statement provided to AAP Thursday.

She said further work had been ordered to "provide greater certainty in future licencing decisions".

"This will include independent advice on the modelling approach to support the assessment of decisions in the transitional zone," she said.

NTLC may be able to reapply for a groundwater licence "should the relevant aquifer be determined as having an available water allocation".

The decision comes after the Environment Centre NT and the Northern Land Council raised concerns about the original water licence, triggering an independent review, which recommended it be cancelled.

NT Farmers says it's disappointed by the outcome and would work to resecure water for the Larrimah precinct within responsible environmental limits.

The association worked with the NTLC to develop and promote the site.

"Years of scientific testing and analysis demonstrates that water is available for agricultural use at the site," chief executive Paul Burke said.

He said water was essential for the site's agricultural viability.

ECNT says it's a win for the environment but questions remain about the NT government's water management system.

"The government's own review panel outlined that the decision did not take a precautionary approach," director Kirsty Howey said.

"(It) did not take into account climate change, used the wrong allocation rules, and used a Technical Report with significant shortcomings."

The Katherine-Tindall aquifer discharges water into Bitter and Rainbow Springs near the town of Mataranka, and the Roper River.

Minister for Water Security Eva Lawler declared a conflict of interest over the review decision due to her oversight of the NTLC, with Ms Fyles saying she acted as a delegate and made a decision to revoke the licence based on advice she received.

About 90 per cent of the NT's water supply comes from groundwater.

NTLC is a government-owned entity that acquires and releases land for development to advance the NT economically.