The Premier Barry O'Farrell has talked down the impact of coal seam gas drilling under homes and other properties in Sydney's south-west.

The New South Wales Department of Planning and Infrastructure is assessing AGL's Camden Gas Project Northern Expansion.

The company is promising to use horizontal drilling rather than the controversial fracking technique, in which highly-pressurised fluid is pumped down an exploration well to release the gas.

However, opponents are promising to fight against the proposal.

Mr O'Farrell has told 2GB, the drilling leaves a hole roughly the size of a teacup saucer.

He says the Government will ensure any mining is done safely.

"I've got people in my electorate..who a couple of years ago when the Epping to Parramatta, Epping to Chatswood rail line were built, have a rail tunnel under their home - less distance under their home that is being proposed in the south-west of Sydney," he said.

"Those homes haven't crumbled and gone to dust, those homes haven't gone down in value."