A new kid has come to the neighbourhood, and it is time we took notice of him. He claims good things, but has potential for a lot of bad. The new kid is shale gas and oil.

These are a part of what is known as 'unconventional' gas and crude resources. They are not different from regular gas and oil, but are found in different and difficult environments. While shale oil and gas have been around for decades, recent technological advances have made their extraction commercially feasible, and there is considerable excitement around their potential for industry in the next few decades.

Several countries have taken up exploitation of shale gas in earnest. The leader in this has been USA. According to the Energy Department of the US Government, shale gas has been a game changer in that country, with domestic dry shale gas production increasing dramatically from 1 trillion cubic feet (tcf) in 2006 to 5 tcf in 2010 - about 23 per cent of total U.S. dry gas production.

In India too, there has been some activity in the last few years, which has culminated with the Ministry of Petroleum and Natural Gas (MoPNG) of the Government of India making public in August 2012 its Draft Policy for Exploration and Exploitation of Shale Oil and Gas. MoPNG also invited comments from all stakeholders on the policy. The draft policy signals the intention of the Government to go ahead in a serious way in exploitation of the shale gas and oil resources of the country.

The draft policy mentions that the Indian Government entered into a MoU with the United States Geological Survey (USGS) to conduct an assessment of the shale gas resources, and in a study done by the USGS in 2011-12, "technically recoverable resource of 6.1 TCF has been estimated in 3 out of 26 sedimentary basins in India." To put this in perspective, the total estimated reserves of natural gas in India on 31 March 2011 were about 1.240 trillion cubic meters, which is around 43.4 tcf. As more basins are still to be explored, the MoPNG is hopeful of the shale gas resource figures going up further.

Serious implications

However, shale gas and oil exploitation has serious environmental consequences, notably on water resources. This is reflected in the fact that the main components of the draft policy include, along with the various issues associated with inviting private players for exploring and exploiting the shale resources (incentives, fiscal and contractual issues, bidding and approval processes) measures relating to water management. This article focuses on highlighting the risks related to water resources from activities of shale oil and gas exploration and exploitation.

The draft policy defines shale gas as "... natural gas generated in-situ and retained in Shale matrix storage, adsorbed onto organic particles, or within fractures in shales of source rock origin and obtained there form through boreholes".

Shale formations have low permeability. The method of recovering the gas trapped in the shale consists of creating artificial fractures in the rock to allow the gas to escape. As these fractures are created using large amounts of pressurized water, it is called as hydraulic fracturing or fracking. The International Energy Agency describes fracking thus: "large volumes of water (mixed with some sand and chemicals) are injected underground under high pressure to create cracks in the rock which remain open. This frees the trapped gas allowing it to flow into the well bore so it can be produced."

"Another key technology is horizontal drilling which enables the well to penetrate significantly more rock in this gas-bearing strata, increasing the chances of gas being able to flow into the well," the agency adds.

As is clear, the process requires large quantities of water. This has serious implications for the water resources of the shale gas areas, including on other existing and proposed uses. The draft policy states that 11,000-15,000 cubic meters of water will be required per well (11-15 million litres), but does not indicate if this is one-time use or if it has to be repeated several times during the life of the well, nor does it state what it the expected gas output per well, so that figures for water needed per unit of gas can be estimated. However, the policy does agree that the volumes of water required are large.

The measures proposed for managing water are placed in the annexure, and not in the main policy - and this is itself an indication of the low priority given to them.

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What is of equal concern is that the water, after fracking, flows back to the surface. As the draft policy indicates, this water can have high levels of total dissolved solids and other contaminants. These contaminants can be from the chemicals that are added for the fracking (often many of these are secret ingredients) or those picked up from residues in the shale. This may also lead to the contamination of the surface and sub-surface aquifers.

Need to address environmental issues

Despite the seriousness of the likely impacts on environment, and particularly on the water resources, the draft policy does not give it the required consideration. The measures proposed for managing water are placed in the annexure, and not in the main policy - and this is itself an indication of the low priority given to them.

Moreover, the measures proposed are essentially non-measures. It is proposed to make mandatory a baseline study of water and air quality in shale gas projects, but this is already required in Environmental Impact Assessments. It is also specified that "river rain (sic) or non-potable groundwater alone should be used for hydro-fracturing jobs." It is not clear how using river and rain water for fracking can be a measure to safeguard local water resources and water uses. Even worse, this condition is rendered toothless by prefixing it with the words "as far as possible". Another problem is if groundwater is used for fracking purposes, this could have serious impact on local aquifers. The measures also mandate rainwater harvesting in some part of the block, and re-use and recycle as the preferred (but not compulsory) way of water management.

The draft policy admits "that there are no specific provisions as on date relating to regulation of the process of hydraulic fracturing, and water injection process as has been provided in ... the USA", but then justifies this by saying that "the Water (Prevention and Control of Pollution) Act 1974, has stringent provisions to regulate/prohibit disposal of polluting matters into water streams/wells (section 24-25)." Anyone who has seen the situation of water pollution control in India, and the effectiveness of these "stringent provisions" would find this assertion laughable.

In fact, the draft policy should have actually recommended formulation of provisions to address the requirements specific to shale gas mining, including to fracking, and even listed some of these provisions. The consideration given to these issues is in stark contrast to the detailed attention given to issues of finance, bidding and attracting private players for exploration and exploitation of shale gas and oil resources.

One reason why the environmental impacts could be very serious is that significant parts of shale gas resources may be in water-scarce areas like Kutch and Rajasthan, or in ecologically sensitive areas like the Himalayas and the western and eastern ghats. Last, but not the least, as fracking proejcts have mushroomed in America, there have been concerns raised that fracking may trigger seismic activity . However, the draft policy has not even mentioned this issue.

Shale reserves in India (Source: Director General of Hydrocarbons).

Far from the starting line

Given this background, it is imperative before proceeding with shale gas exploration and exploitation to ensure that environmental and social safeguards are properly in place. These would include amending the EIA notification, 2006 to mandate all shale gas and oil related activity to require prior environmental clearance; mandatory disclosure of all the chemicals used in fracking; carrying-capacity studies of shale areas, particularly the water resources in the region, by independent and credible agencies; mandatory consent of the gram sabhas in exploration and exploitation, and a ban on shale gas and oil mining in ecologically sensitive areas and catchment areas for drinking water sources.

Moreover, since the shale gas and oil exploration and exploitation are new processes, their initiation must be preceded by wide-spread debate and discussions. This should include making public and giving adequate publicity to the regions and areas that are likely to be shale oil/gas bearing, initiating discussions with the local communities on the likely impacts in the areas, sharing the experiences from countries where such explorations are already taking place (e.g. in the US), experiences not only of the positive and negative impacts but also of the kind of safeguards that have been put in place.

The policy for shale gas and oil exploration and exploitation must take into consideration all of these issues with the seriousness they deserve and not make the same mistake that has been made with other natural resource exploitation, namely, riding roughshod over serious social and environmental concerns.