Last week Mr Buckingham called for the state government to refuse to renew AGL's coal seam gas mining licence in Camden.

"The industry's admission that coal seam gas extraction will inevitably impact on aquifers should be a big red flag to the O'Farrell Government," he said.

"(Premier) O'Farrell can nip coal seam gas in the bud now with a proper high-level inquiry, or he'll have to take responsibility for a legacy of environmental damage and degradation of productive farm lands."

However, the AGL spokesman said: "There are strong rules on environmental management, water management, land access and other issues to protect the environment and ensure the safe operation of the industry.

"We reject that the industry has admitted 'that coal seam gas extraction will inevitably impact on aquifers'.

"AGL has heard the concerns about possible impacts on the water resource raised in many communities and no one, especially AGL, wants to create additional concern or cause damage to agricultural lands."