Stop CSG Illawarra has vowed to ramp up its campaign against coal seam gas after planning authorities supported a time extension for a major exploration project in the region.
The Department of Planning has recommended that an independent planning panel approve Apex Energy's application to extend its exploration project around Darkes Forest and Maddens Plains by three years.
In an eight-page report, the department said the approved 16-borehole project was an "important opportunity" to investigate possible local gas supplies within NSW.
"The NSW government considers that an increased use of natural gas to meet growing energy demand is important to economic growth in NSW," it said.
"Currently, 95 per cent of NSW's gas supply comes from two pipelines - one from South Australia and one from Victoria."
It concluded that the project was "in the public interest" and should be approved, subject to conditions including that Apex comply with the new code of practice for CSG relating to well integrity.
However, Stop CSG Illawarra spokeswoman Jess Moore said the recommendation was "appalling".
"The government seems hell-bent on developing CSG in the drinking water catchments, regardless of risk or the level of community opposition," she said.
"Regardless of this recommendation, and whatever the Planning Assessment Commission decides, this community will not let CSG development in the drinking water catchment go ahead."
Apex Energy's earlier approval to drill exploration boreholes in the region expired in September. Its application for a time extension triggered 237 public submissions.
In its assessment, the Department of Planning noted that most of the submissions raised concerns relating to the CSG industry in general, rather than the proposed time extension.
In relation to water, it said the department was satisfied that the potential impacts had been dealt with in previous assessments and were "appropriately addressed under the existing conditions of approval".
"The department considers these conditions reflect contemporary best practice and are adequate to protect the integrity of any underground aquifers, prevent gas escape and maintain groundwater quality," it said.
It also highlighted that there were no proposed changes to the construction, drilling or operational activities of the approved project, and therefore no additional environmental impacts.
Apex believes CSG from the Illawarra could potentially supply 20 per cent of Sydney's gas for 20 years.