Abstract The usage of oil especially diesel oil as the continuous phase of drilling mud is widespread when drilling through sensitive producing formation and troublesome shale zone. Diesel oil is harmful to the environment-particularly marine environment in offshore application due to extensive legislation now exist in many countries to regulate this form of oil pollution. The use of palm oil derivative could be considered as an alternative based fluid which is harmless to the environment. Tests have been undertaken to evaluate the characteristics of palm oil derivative as the base fluid in the oil based mud and its toxicity effect on marine life and results obtained showed that palm oil derivative is a suitable alternative to formulate oil based drilling mud with the necessary rheological properties, compatible with existing mud additives and non-toxic to the marine life.