There has been mixed reaction to the New South Wales Government's new restrictions on coal seam gas activities, with warnings that power costs will rise on one hand, and warnings from green groups the rules do not go far enough.
The regulations approved by cabinet yesterday include a two-kilometre exclusion zone around all residential areas for coal seam gas exploration and production.
The Environment Protection Agency will regulate the industry - with the Chief Scientist and engineer to audit all activities, including the effect on water catchment areas.
There will also be exclusion zones for identified critical industry clusters, such as for horse breeding and wine producing.
Environment and resident action groups, who have fiercely campaigned against CSG projects have welcomed the news, but they are also arguing that the exclusion zones are not enough.
The community action group the Lock the Gate Alliance has more than 20,000 members across the country.
Its president, Drew Dutton, says today's announcement shows the New South Wales Government has been listening, but it should have gone further.
"We've had to have a huge campaign that has mobilised thousands and thousands of people and that's what they're responding to, I've got no doubt about that," he said.
"First of all, it needs to be expanded to coal. Secondly, it needs to include all CSG, not just simply the new ones, the ones that haven't been approved.
"It also should protect good farmland, our water catchments, our vulnerable underground water systems - all of those things need to be put into an environmental reform package that says there are no-go areas, not just simply the residential areas where there are marginal seats but all residential areas, all areas where we want to protect assets and far-reaching reforms."
The Nature Conservation Council of New South Wales has also welcomed the announcement, saying it is a victory for common sense.
The Chief Executive Officer, Pepe Clarke, says he is pleased existing CSG projects will be audited by the Chief Scientist. But like Drew Dutton, Pepe Clarke says the announcement does leave a lot of issues unresolved.
"Issue number one is the drinking water catchments," he said.
"Barry O'Farrell, back in 2009 said that it was common sense that mining should not be allowed in our drinking water catchments.
"We think it's time for him to deliver on that promise, and to rule out further mining and coal seam gas expansion in drinking water catchments right across the state."
Today's announcement will affect energy giant AGL, which had planned to expand its operations at Camden in Sydney's south-west.
It was forced to suspend the project after a surge in community anger.
Nobody from AGL was available to comment, but in a statement the company said the proposal "will add to the gas supply crisis that New South Wales is facing as existing supply contracts roll off between 2014 and 2017."
"The absence of multiple new sources of supply in New South Wales will add to substantial upward pressure on gas and electricity prices in the state," the statement reads.
"AGL will be seeking an urgent meeting with the Premier and Deputy Premier to clarify the details of this proposal."
Spokesman for the Australian Petroleum Production and Exploration Association Rick Wilkinson says the new rules will make it harder for companies to operate.
"I think it gives a real signal that the goal posts keep moving in New South Wales," he said.
"So there are real concerns about companies that want to invest in New South Wales and create jobs. So that's really the bottom line.
"[The companies] have to go back and look again at what their plans were, recalibrate, and now there's more red tape green tape to go through before actually going to be able to produce gas in New South Wales."