The NSW IPC on Wednesday said the Narrabri coal seam gas project could go ahead under a phased approval.

Adelaide-based oil and gas giant Santos wants to develop the $3.6 billion project over 95,000 hectares in the Pilliga forest and nearby grazing land in the state’s northwest.

It involves drilling 850 new gas wells over 20 years, with Santos saying it had the potential to provide up to half of NSW’s natural gas needs.

The project was recommended for approval earlier in the year by the NSW Department of Planning, Industry and Environment before being referred to the IPC.

The IPC recommended the project be approved subject to 134 conditions.

“The commission concludes the project is in the public interest and that any negative impacts can be effectively mitigated with strict conditions,” the IPC said in a statement.

Under the phased approval, Santos must meet specific requirements before the project can progress to the next phase of development.

The commission received nearly 23,000 public objections to the project with concerns raised about the impact on groundwater, climate change, biodiversity, agriculture, bushfires, health and Indigenous cultural heritage.

The independent planning body argues the potential groundwater impacts can be effectively managed under the conditions imposed which include Santos updating and improving its groundwater impact modelling.

Santos must also fully offset its predicted greenhouse gas emissions in response to public concerns about the impact this would have on climate change.

The commission said it was satisfied with Santos’ biodiversity assessment but has put in place new conditions to strengthen measures that mitigate impacts on flora and fauna.

Community concerns the project would cause significant physical health impacts were rejected by the commission.

The commission’s approval does not include consent for Santos’ proposed gas fired power station at Leewood, the Westport workers’ accommodation or non-safety flaring infrastructure.

The IPC says the project will deliver significant economic benefits for NSW residents, including the diversification of the industry, jobs and royalties and tax revenue for the state government.

Santos chief executive officer Kevin Gallagher said the NSW Government and IPC process had been “comprehensive, transparent and inclusive, providing the community with confidence the project has been properly evaluated and determined to be in the public interest and capable of development without harm to water resources or the environment”.

“Santos is excited about the prospect of developing the Narrabri Gas Project, a 100 per cent domestic gas project that can provide the lowest cost source of gas for NSW customers,” Gallagher said.

“As the economy recovers from COVID-19, game-changing projects like the Narrabri Gas Project are critical to creating jobs, driving investment, turbo-charging regional development and delivering more competitive energy prices.

“IPC approval is a significant step forward for the Narrabri community, a majority of whom support the project and the jobs, business opportunities, infrastructure and community investment that will come with it.

“The IPC outcome confirms that we have relied upon the best science to ensure that the Narrabri Gas Project can be developed safely and sustainably.  We are committed to now delivering on our promise to protect the environment and water resources as we proceed with project development.” 

But Coonamble stock and station agent David Chadwick said the commission had made the wrong decision because of “bad laws” and “bad politics” that promoted coal seam gas.

“This decision puts the groundwater resources we rely on in the firing line of this destructive coal seam gas industry,” he said in a statement.

“The commission has made a terrible mistake and has condemned our region to having to keep fighting this destructive industry. Which we will.”

Mullaley farmer Robyn King said this is the “fight of our lives” and the community could not afford to give up.

“We owe it to the generations that come after us to stop Santos from wrecking this region,” she said in a statement.

Independent MP Justin Field described it as a “hugely disappointing” decision that fails to recognise public concerns and the economic and environmental risks of the project.

“The fact that this project has been approved in 2020, in the face of a climate and extinction crisis, shows that our planning system is broken,” he said in a statement.

Dr Madeline Taylor from the University of Sydney Law School says the project should have been rejected as it risks becoming a stranded asset as unviable gas fields are able to be propped up with taxpayer funds.

The Australian Workers’ Union welcomed the project’s potential to boost jobs and alleviate pressure on households with more affordable gas.

“NSW should be a thriving global heavy manufacturing hub, and that’s exactly what we can become if we better harness our gas wealth. This approval is an excellent step,” national secretary Daniel Walton said in a statement.

The federal government has the final say on the project.

-with AAP