Business lobby slams Labor over Pilliga plan

NSW's peak business group has called on Labor to explain how it would prevent dire gas shortages and mass job losses if it wins power, after the party pledged to ban one of the state's only active coal seam gas projects.

Opposition leader Luke Foley says a Labor government would prohibit coal seam gas mining in the Pilliga Forest near Narrabri, where gas company Santos says its plans to develop reserves could meet almost half the state's gas demand.

Coal seam gas is one of the most critical issues of the election campaign in regional electorates. Community concern over potential effects on water, land and air is likely to affect results in key Nationals-held seats on the north coast and western NSW.

The government is buying back gas exploration licences, and has promised a tougher regulatory regime. However, it will not reveal where in NSW coal seam gas activity would be allowed until after the election.

Labor wants a statewide moratorium on the industry, and a permanent ban in areas such as the Northern Rivers and around water catchments.

On Thursday, Mr Foley said the Pilliga ban would protect a crucial recharge zone for the Great Artesian Basin.

Santos acquired the Pilliga project in 2011 and is expected to lodge expansion plans within months. The project has not yet moved beyond the exploration and appraisal phase.

Mr Foley said he would not offer any compensation to Santos, because the plan would not involve cancelling licences.

But Labor would not permit the current exploration or assessment licences to convert to production licences, nor would it renew the current licences when they expire.

"Communities in our state's north-west have made their opposition to coal seam gas in the Pilliga clear," Mr Foley said.

"The risks CSG poses to the natural assets of the Pilliga, particularly the underground water storages, are unacceptable."

A number of pollution incidents have occurred at the Pilliga site, including a leaking pond that contaminated an aquifer with uranium at levels 20 times safe drinking guidelines.

NSW Business Chamber chief executive Stephen Cartwright said Labor must submit a "credible plan" to address projected gas supply shortages to shore up the gas needs of industry and support jobs.

"With the eastern gas market now exporting to Asia, failure to address projected gas supply shortages will risk the closure of manufacturing businesses and see job losses in Western Sydney and regional NSW," Mr Cartwright said.

"Labor has no plan to ensure that gas users can access the gas they need at competitive prices and its proposed moratorium … and blanket bans simply adds to uncertainty."

Mr Cartwright said Labor's policy "raises concerns about sovereign risk, affecting the overall investment climate in NSW".

Resources Minister Anthony Roberts dismissed Labor's policy as a cynical attempt to win votes, and accused the party of "deciding the future of resources projects without any scientific evidence, rigour or transparency".

Wilderness Society spokeswoman Naomi Hogan said Mr Foley's decision showed "courageous leadership".

In a statement, Santos said the project will create up to 1200 jobs during construction and 200 ongoing jobs, as well as helping to secure the state's gas needs.

Santos last month slashed $808 million off the value of its 80 per cent holding in the Narrabri field and other CSG permits in NSW to $543 million, citing a 364 petajoule reduction in reserves and delays.

Hong Kong-based CLP, which owns the remaining 20 per cent, went further, scratching the value of the Narrabri stake from about $250 million to zero.

With Peter Hannam