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AGL welcomes coal seam gas works approval

AGL Energy shares are higher after the company received approval for the first stage of a new coal seam gas (CSG) project in NSW.

Federal Environment Minister Tony Burke on Monday granted conditional approval for the coal seam methane gas project at Gloucester on the state's mid-north coast.

The approval remains subject to 36 conditions protecting natural fauna and flora, and local groundwater supplies.

AGL group general manager of upstream gas Mike Moraza said the company would now work on satisfying environmental conditions and securing planning approval from the NSW government.

"Coal seam gas is one of the most stringently regulated industries in Australia," he said in a statement.

"AGL will continue to use the best available science and technology to explore for and extract natural gas safely and without harm to the surrounding environment."

AGL shares were up 20 cents, or 1.31 per cent, at $15.45 on Tuesday but had been as high as $15.50 during the trading day.

Stage one of the Gloucester project will include up to 110 gas wells and associated infrastructure, AGL said.

Construction and operation of the project would create significant local employment opportunities, it said.