The federal government is intervening in NSW's coal seam gas (CSG) debate in an attempt to ramp up drilling across the state.
But critics say the government and industry has created a "phantom gas crisis" in the rush to export to Asia.
Federal Resources Minister Ian Macfarlane announced on Thursday that he will form a committee of stakeholders, including farmers and gas producers, in a bid to solve "the NSW gas challenge".
"We have got to get the drill rigs going where the farmers want them going ... where the environment is safe, we have got to get them before Christmas if we can," he told reporters outside NSW's Energy Security Summit.
Mr Macfarlane said they wanted to create a gas supply strategy for the East Coast market to 2020.
"Other states are benefiting from record levels of committed investment ... our challenge now is to make sure the same opportunities are extended in NSW."
Unless the industry is kick-started, Mr Macfarlane warned thousands of jobs in the industrial sector would be lost between Newcastle, Sydney and Wollongong.
But NSW Energy Minister Chris Hartcher denied the state was suffering from a gas shortage.
"The issue is getting it out of the ground and making sure it is affordable," he said outside the summit.
While he was keen to work with the federal government, he said the state's regulatory framework wouldn't change.
NSW Greens MP Jeremy Buckingham said Mr Macfarlane's "chest beating" was counter-productive.
"We have a phantom gas crisis, created entirely by the gas industry's rush to export LNG to Asia," he said in a statement.
"The Abbott government should work with the states to implement an east coast domestic gas reservation policy."
Pepe Clarke, CEO of the Nature Conservation of NSW, said the state and federal governments weren't trying to ensure gas supply for NSW.
"This is about accelerating the development of an export industry," he said.
Prime Minister Tony Abbott said NSW Premier Barry O'Farrell was doing an excellent job, but there was "little doubt" that efforts to expand gas projects had been better handled by his Liberal counterparts in Queensland.
"The Newman government seems to have been very good at ensuring that landholders are reasonably content with the arrangements that have been entered into for gas extraction on their property," he said.
State opposition leader John Robertson will table legislation next month which would see the banning of all CSG activity in Sydney's core water catchments.
