NSW Treasurer and Energy Minister Matt Kean has given oil and gas giant Santos a green light to survey land for a new pipeline but the move is being criticised for sacrificing climate change policies.
Mr Kean has revealed he granted the Hunter Gas Pipeline, wholly owned by Santos, authority on January 13.
This will allow the Adelaide-based exploration and production corporation to "investigate possible routes" from its Narrabri Gas Project into the east coast gas network.
"We've got huge challenges in our energy industry ... This government ... has clear plans and policies to keep the lights on and drive down electricity bills," Mr Kean told reporters on Tuesday.
The controversial project, which potentially crosses 95,000 hectares of Pilliga forest and nearby grazing land in the state's northwest, has the potential to provide up to half its natural gas needs over the next 20 years.
The proposed 50-kilometre connection was declared critical infrastructure by the government in December with one million households said to benefit from affordable gas.
But Greens MP Sue Higginson says the decision amounts to "a very dangerous and rushed step" and will emit an additional five megatons of carbon dioxide yearly.
"The NSW coalition try to paint themselves as good on climate action and the environment but the truth is they have no plan to reduce our impact on the climate," she said on Tuesday.
"(Matt Kean's) actions on this project and others don't line up with his promises and commitments".
Environmental activist group Lock the Gate also slammed the decision.
"This coal seam gas project will blow NSW's greenhouse gas reduction targets and keep NSW at the whim of profiteering gas companies who have been fleecing Aussies with exorbitant prices," it said.
"This gas pipeline threatens precious black soils on the Liverpool Plains as well as several of the most significant koala habitats in NSW.
However, Mr Kean dismissed criticisms of the government's environmental credentials.
"Don't take my word for it, take the WWF's (World Wildlife Fund) word for it, who said our policies are the strongest anywhere in the country when it comes to reducing our emissions," he told reporters.
"We'll stand by our record whether it be on energy or the environment or the economy that continues to deliver more prosperity for everyone across NSW".
Santos, which is approved to operate the project until 2045, can drill up to 850 new gas wells on up to 425 new well pads across the region.
Up to 1300 construction and 200 operational jobs will be created, it says.
Phase two, comprising construction for production wells and activities, is expected to commence in mid-to-late 2023.