NSW's revamped CSG policy draws anger

The Baird government claims its revamped coal seam gas policy will protect NSW's drinking water as it faces criticism it has rolled out the red carpet to the controversial industry.

Debate has reignited over the future of the CSG industry after Resources and Energy Minister Anthony Roberts on Thursday released the government's much-anticipated package of reforms for tougher regulations.

He said the government had agreed with all 16 recommendations of NSW chief scientist Professor Mary O'Kane, who called for tighter oversight of the industry.

"We are unashamedly raising the standards," Mr Roberts told reporters.

The government will cancel all 16 petroleum exploration licence applications, while leaving its freeze on new exploration licences in place until October 2015.

It will also devise a new system for granting exploration licences based on economic, environmental and social factors.

The gas industry will also no longer be allowed to operate within national parks.

Premier Mike Baird said NSW would soon have the toughest regime CSG industry oversight.

But Mr Roberts refused to rule out CSG activity in water catchment areas, saying all applications will be assessed on their merits.

"If there is any danger to those water supply areas, of course we won't be releasing them for exploration, let alone production," he said.

NSW's three current CSG projects in Camden, Gloucester and Narrabri will be allowed to proceed, with the minister saying he expects them to meet the new higher standards.

Nationals leader and Deputy Premier Troy Grant, who joined Mr Roberts for the announcement, conceded the CSG industry might be a hard sell in seats held by the Nationals.

"(CSG) is the most polarising subject matter that we have leading into this (March) election," he said.

Opposition Leader John Robertson said the proposed changes fell way short of community expectations.

"Today what we see is Mike Baird open the gate and roll out the red carpet for the coal seam gas industry," he said.

Kate Smolski, who heads the Nature Conservation Council, said her organisation was profoundly disappointed at the missed opportunity to reform the industry.

"We are not seeing the protections that the community deserves in this plan," she said.

Former Gloucester mayor Julie Lyford expects to see anti-CSG protests ramped up again in her community.

"We will fight you through science, we'll fight you with the families ... with the children because what you're doing is playing Russian roulette with (our water) catchment," she said.

Greens MP Jeremy Buckingham said the battle lines for the March election had now been drawn on CSG policy.

"The NSW government's gas plan is nothing but lipstick on a pig of an industry," he told reporters.

The NSW Business Chamber said the plan was an important step in addressing pricing and supply challenges, and ensuring the future competitiveness of industry and jobs.