MoEF wants water cess imposed on shale gas explorers

Major basins that would be taken up during first round of auctions may be Cambay, Krishna Godavari and Ranigunj

The ministry of environment and forests (MoEF) has asked its petroleum counterpart to include water cess for explorers as a part of its coming shale gas policy, considering the higher amount of water usage for shale exploration.

“As per the draft, there was no cess on shale exploration. However, we have asked the petroleum ministry to include water cess as shale exploration would pollute ground water. Moreover, rather than the central regulations, we also want the state pollution boards to monitor the water usage on shale gas blocks,” said a senior official in the environment ministry.

Shale gas is natural gas trapped in sedimentary rocks (shale formations) below the earth’s surface. The major basins in India that would be taken up during the first round of auctions may be Cambay, Krishna Godavari and Ranigunj. In the initial exploration stage, these basins are likely to see investments worth $2 billion.

According to petroleum ministry sources, the final draft of the shale gas policy is waiting for petroleum minister M Veerappa Moily’s clearance, before being forwarded to the Cabinet. Earlier, the environment ministry had raised concerns over issues like huge amounts of water required for fracking technology, besides land-related issues.

According to the policy, the MoEF is set to take a final call on several issues like leading a panel of agencies that would be conducting environmental impact assessment on the blocks.

While the total recoverable resource in these three belts would be around 12 to 15 trillion cubic feet (TCF), the immediately recoverable resource would be in the range of 2-6 TCF. The policy also states that a steering committee would be looking into the issue on projects, audits and accounts with a view to exploiting resources optimally. This steering committee would have representatives from contractors, the MoEF and the National Environmental Engineering Research Institute (NEERI). The petroleum ministry is also preparing a model contract for shale exploration in consultation with ministries of law, finance and environment.