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Environment Minister Tanya Plibersek has approved plans to build more than 120 new gas wells in southern Queensland.
Senex Energy, owned by Australian billionaire Gina Rinehart and South Korean steel maker Posco International, has been given the go-ahead for its $1 billion plan to expand its gas fields near Wandoan, about 400 kilometres north-west of Brisbane.
The company had put the project on hold in December 2022 in response to the federal government's intervention in the gas market.
However, it said the development would proceed after receiving all the major approvals needed.
"We now have the necessary investment confidence and regulatory approvals to proceed with our expansion and deliver sorely needed natural gas supply to the east coast market," said Senex Energy CEO Ian Davies.
"This announcement is especially timely given the current pressures that the east coast energy system is experiencing, particularly in southern states."
The expansion is set to produce enough electricity to power more than 2.7 million homes each year, equivalent to more than 10 per cent of the east coast's annual domestic gas requirements.
It comes after a warning from the Australian Energy Market Operator about a gas shortage across southern states.
Government approval
The federal government said the decision to approve the project was lawful.
"This project will primarily contribute domestic gas supply to households and Australian manufacturing – including for glass, bricks, cement and food packaging," a spokesperson for Ms Plibersek said.
"Under Labor, we've already seen a 25 per cent increase in renewable energy in our grid. We are ticking off renewable energy projects at record rates, outstripping coal and gas projects seven to one."
Mr Davies said the expansion would begin delivering 60 petajoules of gas to the market by the end of 2025 and would create more than 900 jobs over the project's lifetime.
"The expansion will drive a significant boost in natural gas supply for Australia, demonstrating Queensland is continuing to do the heavy lifting for the east coast," he said.
The project was approved with 75 conditions, including a prohibition on the discharge of coal seam gas-produced water to surface water and a ban on clearing any koala foraging and breeding habitat.
The company has also been ordered to implement a water monitoring and management plan to watch for issues such as subsidence where land sinks.
Environmental concerns
Environmental lobby group Lock the Gate said it was concerned the project could lead to further subsidence across the region.
"The more the gas fields spread, the more problems of subsidence and groundwater loss and depletion we're going to see," said member Georgina Woods.
Ms Woods said the project's approval showed Australia continued to put off the hard decisions on transitioning the economy away from fossil fuels.
"If fossil fuels continue to expand, Australia has lost its way in its climate change action," she said.
"The job (of transitioning the economy) is very difficult, but it has to done because the consequences for Queensland from global warning will be catastrophic."