The State Government will kill off the majority of the state's so-call zombie gas licences but will leave rich farming land in the Liverpool Plains open for exploration.
The long awaited Future of Gas Statement was signed off by cabinet on Monday. It outlines plans for the gas industry in NSW as well as ruling out gas production under most petroleum exploration licences.
Deputy Premier John Barilaro said the gas statement would provide industry bodies, regional communities and farmers greater certainty around jobs, economic prosperity and land use.
"Supporting gas production in and around the Narrabri region and investment in gas-related infrastructure will help to create thousands of jobs, strengthen local economies and drive the state's recovery from COVID-19," he said.
"We have heard the concerns and questions from our regional communities around PELs and I can confirm today we are reducing the area of land available for gas exploration by 77 per cent. The active PELs that remain will be to support the long-term future of the Narrabri Gas Project.
The Government will amend the Mining State Environmental Planning Policy to reflect these changes.
But the attempted compromise has attracted criticism from both the gas industry and environmental groups.
Australian Petroleum Production and Exploration Association NSW director Ashley Wells said the move to limit future gas development to the Narrabri Gas Project would lead to higher gas prices for the long term.
"It is pretty simple, the cheapest gas is the gas closest to market. This shortsighted decision will mean higher gas prices in NSW are the norm not the exception," Mr Wells said.
"For the NSW Government to effectively ban a proven, safe and highly regulated industry doesn't make sense.
"The failure of NSW to respond to increasing gas demand and develop its gas reserves will have unfortunate consequences, in the form of lost jobs, higher energy prices, and foregone economic opportunity. Manufacturing jobs will go to other states and territories or overseas.
Farmers in the state's north west reacted angrily to the news that some of the state's most productive farmland will be available for coal seam gas mining.
"For more than a decade farmers across north west NSW have been ploughing time and money into defending farms and the region's water and land resources from the threat of the industrial gasfields," Mullaley farmer Margaret Fleck said
"With this gas strategy, John Barilaro has condemned our communities to having to keep on fighting, not just for ourselves, but to safeguard water, soils and the social fabric of rural communities for the next generation.
"The gas strategy is backing not one but two coal seam gas pipelines, that are fiercely opposed by landholders across hundreds of kilometres of farmland and erodible, fertile soils. We will not lie down and let this industry spread through our districts.
Lock the Gate Alliance spokeswoman Lock the Gate Alliance spokesperson Georgina Woods said the plan was a betrayal of rural NSW communities that were still emerging from drought.
"If the government had been consistent, we would be celebrating. Communities in Coonamble, Gilgandra, Moree and the Upper Hunter are finally spared from the spectre of coal seam gas, and the decision not to proceed with gas exploitation in the Far West is very welcome," she said.
"Promises to seek alternatives to gas are welcome, but the Deputy Premier's decision to expand coal seam gas is at odds with state's commitment to carbon neutrality and makes the Liverpool Plains and Namoi Valley a sacrifice zone for the double whammy of Santos's coal seam gas damage and the legacy of climate change."