On 19 February 2013, NSW Premier Barry O’Farrell announced new measures to strengthen regulation of the NSW coal seam gas industry. The policies endorsed by cabinet include, among other things, an independent review of all CSG activities in NSW, and the implementation of a two kilometre exclusion zone around residential zones to prevent new coal seam gas exploration, assessment and production activities. The CSG industry will potentially lose access to hundreds of wells located in exclusion zones. In an article on 20 February 2013, The Sydney Morning Herald reported the value of such wells to be approximately AU$4 billion.

In response, AGL Energy warned that the proposed restrictions will put further upward pressure on gas and electricity prices in NSW. According to The Sydney Morning Herald on 28 February 2013, AGL Energy is also considering legal action against the State government, having reportedly invested AU$325 million into its Camden and Hunter Valley CSG projects. Other industry proponents have also warned against the sudden policy shift, with Santos reportedly suggesting that the current policy uncertainty is threatening NSW’s energy security. The industry is now waiting on details of a new licensing regime, to be administered by the NSW Environment Protection Authority