Shale gas nowadays is an important source of unconventional gas. The limited conventional gas supply makes the unconventional sources as a new source of gas. In this research, the aim is to design a mud formulation that can carry out essential functions of mud for shale gas drilling. Commonly for shale gas drilling, water based mud is used. However, water based mud is ineffective when dealing with water-sensitive shale. The alternative way to deal with this type of shale is using synthetic-based mud (SBM) or oil-based mud (OBM). OBM is an effective mud while drilling well. However, it is toxic and gives negative impact to environment. SBM somehow is more environmental friendly compared to oil based and ester is one of the synthetic based fluids. In order to prove this statement, a toxicity test was carried out to investigate the impact of ester based mud on selected marine life. The results of the test were compared with past research results. The ester use in this research is methyl-ester C12-C14 derived from palm oil and the mud was formulated at different oil-water ratios which are 70/30, 80/20 and 90/10, respectively and the best rheological performance can be seen at 80/20 oil-water ratio. Then, the performance of this mud had been compared to other types of mud which are sarapar-based and WBM. The findings revealed that the rheological performance of ester based mud is comparable with common based mud used for shale gas drilling. Apart from that, it is less toxic than other based mud which can maintain 60% prawn’s survival even after 96 hours exposure in 100,000 ppm of mud concentration in artificial seawater.