Exploration and production of natural gas from coal seams (CSG) began in Australia in 1996, although it was first produced during the early days of coal mining.

CSG was extracted at the Sydney Harbour Colliery in Balmain in the early 1900s. It was compressed and sold as an industrial and motor fuel. Production reached its peak in 1944 when more than 11 million cubic feet of gas was produced.

Today, CSG exploration and production in NSW is subject to some of the most rigorous regulations in the world to ensure the protection of the environment and the safety of our communities. Exploration and production can proceed only after detailed multiagency assessments which address environmental, community, health and water concerns.

The NSW Government has banned several exploration and production practices used in CSG activities in other parts of the world, including using harmful chemicals in the hydraulic fracturing process. It has also banned evaporation ponds to encourage the treatment and re-use of water extracted in the process.

The NSW Government has introduced regulations which will ban all new coal seam gas exploration and production activity within 2 kilometres of existing and future residential areas. Coal seam gas activity is also banned within areas identified as the Upper Hunter equine and viticulture Critical Industry Clusters.

A hold on exploration and extraction of CSG in the 'Special Areas' zone of the Sydney drinking water catchment also now applies pending an investigation by the NSW Chief Scientist and Engineer on the impact of these activities.

Stringent well integrity standards were also imposed in 2012 to protect aquifers and our precious water resources.

A desktop study is typically the first stage of exploration. After identifying prospective deposits through geological studies and geophysical surveys, engineers move into the field to drill a core hole (up to 20cm in diameter) to provide a sample of what is below the surface.

The data gathered from the drilling provides comprehensive geological information and details of the gas content in the coal seam.

Once testing is complete, core holes are cemented and plugged and the site is fully rehabilitated by the exploration company, in line with NSW Government requirements.

History of mining, oil and gas production

NSW has a rich history of mining and exploration and miners have been tapping into natural gas from coal seams since the early days.

From convict days, NSW has been a major contributor to the minerals and resources industries which have shaped modern Australia.

Mining gave the colony of NSW early independence and wealth as well as providing a key source of employment.

In the two centuries since, mining in NSW has expanded into a sustainable industry that provides the state with wealth and prosperity, and Australia with its reputation as one of the world's largest mining nations.

In 2012, mining companies contributed $9.3 billion, including $2.6 billion in wages and salaries and $6.7 billion in the purchase of goods and services and community contributions. This generated another $17.3 billion in indirect economic activity.1

The Hunter region was the recipient of the largest proportion of direct expenditure from the companies surveyed ($4.6 billion), followed by Sydney ($1.8 billion), the Illawarra ($956.6 million) and the Central West ($858.4 million).1

Mining uses only 0.1 per cent of NSW land, compared with agriculture and food production which take up 76% of the State's land. When mining is complete, the land is restored to post-mining uses determined by the NSW Government in consultation with the community. In addition to rehabilitation of mine sites, mining companies provide environmental bonds to ensure that the cost of rehabilitating a mine site is never borne by the NSW taxpayers were a mining operation to become insolvent.1

In 2012, Australia's oil and gas industry was valued at $28 billion per year, and estimated to contribute 58% of Australia's primary energy, 2.5 per cent of Australia's gross domestic product, and almost $9 billion in direct tax payments.2

Timeline of mining

Pre-1788 – Aboriginal people in the Newcastle and Hunter regions use coal as a cooking fuel; elsewhere in the state they mine for ochre, used in art and body decoration, and quarry for stones such as quartz to make weapons and utensils.

1797 – Lieutenant John Shortland discovers coal while pursuing escaped convicts near the Hunter River (also known as Coal River). Shortly afterwards, government coal mines begin operation with convict labour.

1799 – A coal load on a ship bound for Bengal becomes Australia's first export.

1802 – Governor King establishes a penal settlementat the mouth of the Hunter River to more effectively and efficiently mine the coal. He names it Newcastle.

1823 – Gold is discovered at Bathurst.

1830s – the AA mining company imports Welsh and Irish miners to work the NSW coalfields.

1844 – Copper becomes the first metal to be mined in NSW.

1851 – Sapphires are discovered during gold mining in the Macquarie and Cudgegong rivers.

1855 – Gold is discovered in payable quantities near Orange and Australia's gold rush begins.

1864 Following Polish explorer Count Strzelecki's discovery of silver, commercial mining begins.

1865 – Commercial production of coal begins at Lithgow.

1867 – Commercial mining of diamonds begins at Cudgegong, south-east of Mudgee.

1873 – Opals are discovered at Lightning Ridge, and will soon be mined at White Cliffs.

1878 – The Great Cobar Copper Mining Company Limited begins production in the state's west, staffed by mostly Cornish miners.

1883 – Australia's richest deposit of silver, lead and zinc is discovered at Broken Hill.

1897 – Sydney Harbour Colliery opens at Balmain.

1908 – NSW produces 9.1 million tons of coal, out of a national yield of 10.1m tons, and exports 2.55m tons out of an Australian export total of 2.56m tons; the state employs 17,734 in the coal mining industry.

1940s-1970s – Open cut mining begins. Despite closing of collieries and merging of mining companies, coal production doubles.

1980s – For the first time NSW's coal production is surpassed by another state, Queensland, however NSW cements its international reputation as a minerals exporter and producer of high-quality black coal.

Timeline of CSG production

1940s – Methane gas extracted from the Sydney Harbour colliery at Balmain is compressed and sold as motor fuel.

1976 – Exploration for CSG in Australia begins in Queensland's Bowen Basin when Houston Oil and Minerals of Australia drill two wells.

1996 – Australia's first coal seam gas extraction begins at the Dawson Valley project in central Queensland.

2001 – NSW commences coal seam gas production at Camden in Sydney's west.

2010-11 – CSG activity in Queensland is at record levels with 600 CSG production and exploration wells drilled in the Bowen, Galilee and Surat basins.

March 2013 – Queensland records a workforce of more than 27,000 in the state's gas industry, with an increase of 8500 jobs reported in the six months to March 2013. Queensland industry operators have signed 3500 landholder agreements and contributed more than $100 million to community projects and causes.

1NSW Mining 2012 – a snapshot, New South Wales Minerals Council

2 Australian Petroleum Production and Exploration Association (APPEA)