Fracking of four coal seam gas wells in northern NSW has been approved, sparking criticism from the Greens.
AGL Energy has received NSW government approval to begin an exploration pilot program at its Gloucester gas project.
The company will now be able to fracture stimulate - or frack - four wells drilled two years ago near Forbesdale.
NSW Greens mining spokesman Jeremy Buckingham said local residents had been given less protection than those near other controversial gas projects in Western Sydney.
"It's outrageous that the people of Gloucester will have fracking within a few hundred metres of their homes," he said.
AGL said it would conduct its pilot program in a safe manner, and would minimise the disturbance to locals.
Chief executive Michael Fraser said the Gloucester gas project could secure a local supply of gas for NSW, with the potential to provide 20 per cent of the state's needs.
None of the gas produced from the project would be exported out of NSW, he said.
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