Challenges in Shale Gas Production Cannot Be Resolved by Generic Environment Clearance Processes

The demand for natural gas in India is increasing at an alarming rate of 20% per year burdening India’s economy with an import bill of around $120 billion annually (Abdi 2018). In pursuit of producing in-house natural gas, India’s Ministry of Petroleum and Natural Gas is keener than ever before to exploit unconventional natural gas resources, particularly shale gas. 

As reported by United States Energy Information Administration (EIA), in 2011, India has around 290 trillion cubic feet (TCF) risked shale gas in place and had around 63 TCF technically recoverable shale gas. If India is able to exploit shale gas to the fullest, it can fulfil the natural gas demand and supply gap that has widened up to 38% in 2017 (Batra 2013). 

Currently, India is exploring shale gas reserves in 50 allocated blocks spreading across seven Indian states^[1]. However, shale gas being an unconventional gas has complex exploration and production challenges than conventional gases. While conventional gases are found in the porous rock, they can be sponged out easily. Unconventional gases such as shale gas are located under non-porous, low-permeable rocks that do not allow free movement of gases. Accordingly, the rocks containing unconventional gases need to be fractured through external pressure. In cases of shale gas exploration, a series of wells (sometimes, horizontal as well as vertical) is dug to reach the rock containing shale gas, and through the wells pressurised water, mixed with chemicals, is injected to fracture the rocks. The whole process is known as fracking, and each fracking activity requires around 5 to 9 million gallons of fresh water which is five to 10 times more than processes adopted for exploring conventional gas resources. 

Therefore, considering the exclusive nature of fracking activities and the enormous requirement of water, the Indian government needs specific policies towards the development of shale gas. 

The Legal Status of Shale Gas in India

It is important to note that while “hydrocarbons” as a resource fall under the legislative domain of central government, water, in a generic sense, is constitutionally governed by the respective states.^[2]

The central government allocates oil and gas blocks to corporations through competitive bidding in which private and public players are given equal rights. Recently, the central government implemented the Hydrocarbon Exploration and Licensing Policy (HELP) that allows a project proponent to explore all kinds of hydrocarbons in the block that is allocated to it. A project proponent may explore and exploit conventional and unconventional gases together in a block. 

Considering that the fracking process is different than the other natural gas production processes, the Indian Ministry of Petroleum and Natural Gas released a “Draft Policy for the Exploration of Shale Oil and Gas in India” in 2012.

The policy stressed the importance of shale gas fracking in India, stating that “shale gas could play an increasingly important role in the global natural gas market.” However, the draft policy highlighted the potential issues concerning shale gas fracking, majorly concerning the water-specific issues. 

More recently, to manage the natural resources and shale gas fracking process, the ministry released “Guidelines for Environmental Management during Shale Gas/Oil Exploration and Production.” 

The guidelines state:

“Overall volume of fracture fluid is five to 10 times that of conventional hydraulic fracturing, but it is also to be emphasised that fracturing treatment is a collection of multiple fracturing treatments of the size used in conventional wells.” 

Further, the guidelines mention that water management is one of the key concerns. They state that the major and prime difference being in the hydraulic fracturing technologies requiring a large volume of water; the activities are likely to deplete water sources and cause pollution due to the disposal of produced water. However, instead of dealing with the water-specific issues, the guidelines (apart from explaining existing provisions) stated that the generic environment clearance process adopted by the Ministry of Environment, Forest and Climate Change (MoEFCC) will suffice to ascertain water-related issues posed by fracking. But, MoEFCC has not laid down any specific guidelines, policies, or manuals differentiating between conventional and unconventional gases to grant environment clearance.  More recently, despite the gaps, on 1 August, 2018, the cabinet approved a policy allowing companies to exploit shale gas in contract areas that were primarily allocated to exploit conventional gas.  

Water-related issues concerning shale gas fracking seem unregulated as the procedure stands today.  

Water Management Concerns

Water management in India is a complex issue. Although most of the natural resources, including water, in India are a state subject (except hydrocarbons), water governance has always been a contested area. In 1970, the central government proposed a  “Model Groundwater Bill” which has been revised three times until the basic version of 2005 (Ministry of Water Resources, Government of India 2008). Apart from the constitutional issues such as the right of the community over water, the bill proposes to tackle issues concerning groundwater ownership and, the administrative flow of groundwater processes. This issue is currently dealt with state-specific legislation and often lack concrete legal standing.

Although India follows the international environmental principles and has constitutionally recognised “access to water” as a fundamental right under Article 21, this expansive interpretation of Article 21^[3] is rarely implemented A P Pollution Control Board v M V Nayudu 2000). 

Further, all the natural resources in India (including water) is subject to public trust doctrine (M C Mehta v Kamal Nath 1997), which makes the state trustee of all the natural resources whereas citizens the owner of the resources. The state can only use the natural resources of public interest and cannot allocate water or other natural without weighing the public interest against the business purposes. 

Additionally, the Supreme Court, at several instances, reiterated the precautionary principles:   

(i) Environmental measures taken by the state and the statutory authorities must anticipate, prevent and attack the causes of environmental degradation. 

(ii) Where there are threats of serious and irreversible damage, lack of scientific certainty should not be used as a reason for posting measures to prevent environmental degradation.

(iii) That the ‘onus of proof’ is on the actor or the developer/industrialist to show that his action is environmentally benign (Kelvin 2011). By regarding the two as part of the environmental law of the country, the Supreme Court has to some extent conceptualised the common law remedial measures of awarding compensation to the victims of a tortious action in water pollution cases (Vellore Citixan Forum v Union of India 1996). 

Under customary laws, the person owning the land also owns the water beneath the ground. However, under the Easement Act, 1882, the person owning the land can only “use and control” the groundwater. However, a few states in India moved from the concept of “groundwater ownership” to “groundwater entitlement” referring to a particular quantity of groundwater one can extract and use.  Consecutively, the emerging concept may result in a market-based water right system where buying and selling of groundwater by a private party may surface well over a period (Koonan 2016). However, since the groundwater in India is also subject to “public trust doctrine,” there lies a legislative uncertainty over the proprietary nature of groundwater in India (Cullet 2014). This legislative confusion has given an edge to businesses to install large mechanical pumps and drench water from the adjoining farmlands.  For example, recently, a multinational corporation drew around 5,10,000 litres of water each day from boreholes and open wells leading to a series of litigation (Blanco and Razzaque 2010).

Water and Hydraulic Fracking: Complexities and Confrontations

Since water laws are still premature in India, implementing a water-intensive energy natural gas extraction process will surely hurt community water rights. The Directorate General of Hydrocarbons (DGH) states that shale gas extraction requires approximately 5 to 9 million litres of water, but it 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 the expected gas output per well, so that figures for water needed per unit of gas can be estimated (Smith 2012). This amount of water is huge in a nation where “thirst” is still a cause of thousands of deaths^[4]. 

Considering the limited water legislation in India, the implementation of fracking may result in geopolitical and legislative complexities. For instance, shale rocks are usually adjacent to rocks containing useable/drinking water known as “aquifers.” While implementing the hydraulic fracking, the shale fluid can easily penetrate to aquifers leading to groundwater contamination. This contamination may result in methane-poisoning of water used for drinking and irrigational purposes. To avoid such contamination, as per industry standards, a project proponent must maintain a distance of 600 metres between aquifers and fracture zones (Davies et al 2012). 

The Indian water legal regime is far away to make such specific observations, as aquifers are not defined in any of the Indian environmental regulatory or legal regime leading to a free pass for unregulated mixing of shale fluid and aquifers. Moreover, the landless have no right to groundwater, and accordingly peasants and tribal communities who have no ownership rights over land have no right on groundwater. Also, a project proponent may easily exploit groundwater while implementing the hydraulic fracking process with none or limited accountability of their actions.  In such a situation, the intent of “Public Trust Doctrine” is defeated, and the precautionary principle will be non-implementable. 

Waste water management in India poses another fracking-water related concern. The water produced through fracking is not well defined. A mixture of water, chemicals, and sand is injected underground at high pressure to fracture the rock enabling the flow of oil and gas. When the pressure used to inject the mixture is released, some of the fluid returns to the surface, during what is known as the “flowback” period. This period typically lasts two weeks (Kelvin 2011). Return flows continue as oil and gas is pumped from the well. The characteristics of “flowback water”, due to the liquid injected in shale fluid, is different than usual waste water and the recycling and leakage related issues of the “flowback water” are different. 

Though unlocking India’s domestic shale reserves could help the country meet its rapidly growing energy demand while reducing dependence on expensive energy imports. The government is currently taking steps to remove the hurdles posed by a lack of infrastructure, gaps in the regulatory framework, and public environmental concerns (Brennan and Pastorelli 2013). However, implementing such a water-intensive project without addressing the gaps in present water policies may affect millions of vulnerable citizens of India.  

The Way Ahead

India is aiming to start exploring shale gas by 2020, and for achieving this target, the government is creating a set of policies and directives. Between 2012 and 2018, the government has provided policy support to businesses by allowing project proponents to exploit conventional and unconventional shale gas resources simultaneously in a block. 

A recent policy also allowed a project proponent to explore shale gas in the areas that were primarily allocated for conventional gases (PIB Delhi 2018). However, the pace of these “ease to do business” policies may interfere with the existing public policies that may raise concerns regarding rationing of water and communities’ access to water resources. 

Despite the exclusive nature of challenges posed by shale gas fracking, the government has left these challenges to be resolved by generic environment clearance processes that do not even have a separate environment clearance manual for unconventional hydrocarbons, including shale gas. Also, the ministry’s draft policy and the DGH guidelines did not specifically deal with the issues raised by the proposed fracking operations. 

Before implementing the fracking process, the government must establish the domain-specific environment clearance process that takes into account the (a) closeness of shale wells to the nearing aquifers, (b) precautionary measures that stop the seepage of contaminated water into groundwater resources, and (c) a technical solution to the flowback water issue, specifically legislative categorisation of different types of waste water and their treatment methodology.