Conservationists welcome NSW CSG buy back

Conservationists are thrilled the NSW government will buy back and cancel three more coal seam gas (CSG) exploration permits, particularly one covering Sydney's water catchment.

However, there is still concern about AGL's Gloucester Gas Project north of Newcastle, which has had waste water disposal issues.

"Disappointingly, AGL has committed to maintaining or expanding other existing CSG operations, including those at Camden in Sydney's southwest, and at Gloucester, where there is significant community opposition to the development of a gasfield in the midst of prime farmland and communities," Nature Conservation Council (NCC) campaigns director Daisy Barham said in a statement on Monday.

Industry, Resources and Energy Minister Anthony Roberts said AGL will look at whether Gloucester is viable, but admitted NSW does need its own domestic gas supply.

The energy company also announced on Monday it will write down the value of the Gloucester gas project by $193 million after tax.

"We're currently at the mercy of other states and territories when it comes to delivering a safe gas supply to customers in NSW," Mr Roberts told reporters in Sydney on Monday.

"We produce five per cent of our gas needs in NSW for the future as part of this gas plan.

"We've got to pause and now reset with the buy-backs, but there will also be a recommence. For me as energy minister, to have a safe secure gas supply, not just for homes in NSW but businesses in the future, is critical."

Mr Roberts praised AGL for surrendering the three permits, including its Petroleum Exploration Licence (PEL) 2, which covers much of Sydney, and PEL 4 and PEL 267 in the Hunter Valley, and urged others to take advantage of the scheme before it ends on September 30.

After that point, the minister said the government will move into the next stage of its gas plan, which is to "use it or lose it".

"Companies that cannot meet our new strict standards and conditions will look at forfeiting their licences," he said.

But groups such as Stop CSG Illawarra want more assurances that Sydney's drinking water supply is safe from future licence applications.

Stop CSG Illawarra spokeswoman Jess Moore said: "If this government is serious about securing our drinking water supply, they'll go beyond cancelling licences and announce a ban."