Santos to drill new wells in Narrabri region

MULTI-NATIONAL gas giant Santos will begin drilling 15 new gas wells in the Narrabri region in north-west New South Wales, with some inside the Pilliga Forest.

The Federal Government agreed with Santos' own analysis that suggested the operation was not enough of a risk to water supplies to activate the "water trigger" aspect of Commonwealth legislation.

Santos sent its plans to Canberra for assessment in an effort to be "completely transparent" at a time when opposition to coal seam gas in New South Wales is particularly contentious.

The gas powerhouse, which is in the midst of developing the $20 billion GLNG project outside Gladstone in Queensland, will be restricted to exploring the gas reserves in the area, not processing them without further approval.

This spot of good news for the industry was short-lived, however, as the NSW Government created more new laws restricting gas operations in the state.

On Thursday, the government announced another 5 million hectares of land would be excluded from any gas exploration.

New CSG projects are to go through a "gateway panel" of six experts including groundwater specialists in an effort to add even more scrutiny to the process.

The uncertainty created by frequent change to planning legislation has prompted concern from industry and the Federal Government, particularly as NSW faces a looming gas crisis.

Resources Minister Chris Hartcher said he understood that NSW needed to develop its gas reserves, but this would be done only in acceptable locations.