A drilling licence for a controversial coal seam gas mine in the NSW Northern Rivers region will remain suspended.
On Thursday the Office of Coal Seam Gas (OCSG) upheld the NSW government decision to stop Metgasco from drilling in Bentley.
Energy Minister Anthony Roberts suspended the licence in May after an audit found the company had failed to properly consult the community about the Rosella well operation.
The company referred the decision to the OCSG.
"The outcome of the review is that the decision to suspend the operations of Metgasco under the activity approval remains in place until the OCSG is satisfied that the company has met the conditions of its title and the conditions of the activity approval," Mr Roberts said in a statement.
The minister had also in May referred information about shareholdings and interests in Sydney-based Metgasco to the state's Independent Commission Against Corruption (ICAC), although the watchdog later said it wouldn't launch an inquiry.
Metgasco has filed for a judicial review in the Supreme Court, and plans to argue the minister's decision was "unlawful" because it wasn't authorised in legislation and denied the company procedural fairness.
It also disputes the government's claim it did not properly consult the local community.
Metgasco is further considering a claim for damages to compensate it for losses - estimated at about $3 million - arising from the suspension, the company said.
The government decision to suspend the licence came just days before thousands of protesters were expected to form a blockade at the Bentley drill site and up to 800 police officers were detailed to monitor their activities.
Reacting to the decision, Metgasco again claimed the suspension was unlawful and made "without valid justification".
"The government should not allow itself to be intimidated by activists making spurious and ill-informed claims about drilling for natural gas when the state is running out of gas and regional areas are crying out for investment," managing director Peter Henderson said in a statement.
Anti-CSG campaigner and landowner Ian Gaillard welcomed the OCSG decision but said the terms left a lot of uncertainties for the local community.
He warned the blockade would resume if Metgasco was allowed to resume drilling.
"It's really time for all parties to recognise that the people of the Northern Rivers will actually get out and do a blockade," he told reporters.
"They don't want a gasfield in the area and are prepared to make the sacrifices necessary to make that happen."
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