Petroleum companies could be selling onshore gas produced through hydraulic fracturing in the Northern Territory in five years, after the Labor government lifted a ban on the controversial practice.

NT Chief Minister Michael Gunner assured Territorians fracking could occur safely after he opened up more than half of the territory’s land mass to exploration.

Any risks could be acceptably reduced by following the recommendations of a recent scientific report, he added.

“I want to assure Territorians that we will protect our water, that traditional owners will continue to have a veto over fracking on their land, that industry will be required to pay their fair share to regulate fracking with the creation of an appropriate cost-recovery model,” he told reporters.

A “return to taxpayers” through gas royalties from companies could start from the early to mid-2020s although Mr Gunner conceded it was unknown how profitable it would be or how many jobs would be created.

The decision was not a surprise and was welcomed by industry and business, but sparked anger from opponents.

Mr Gunner will appoint an independent officer to ensure the implementation of the 135 recommendations of Justice Rachel Pepper’s 16,000-page report, including “strict new laws and regulations”.

This includes “real time” well monitoring to protect water supplies, the public release of environment plans and the right to oppose projects in the courts.

The Gunner government – under pressure to create jobs due to the near completion of the major Inpex offshore gas project – is divided over the issue.

Labor MP Sandra Nelson has voiced her opposition to fracking, with the majority of constituents in her Katherine electorate opposed.

The Beetaloo Sub-Basin in the Sturt Plateau region near Katherine is the most likely area to be developed with significant shale gas resources and Origin Energy among the companies interested.

Environment groups, some tourist operators and traditional owners slammed the decision, saying it would increase carbon emissions and threaten the pristine environment.

“We will not take this decision lying down,” said Lauren Mellor, spokeswoman for Frack-free NT.

“Communities, landholders and businesses right across the NT have pledged to redouble our efforts until a territory-wide fracking ban is in place. For us, this is just the beginning.”

Energy company Jemena welcomed the news saying it now plans to expand the Northern Gas Pipeline, creating around 4000 jobs across northern Australia, costing $3 billion to $4 billion.

The federal government has pressured states and territories to allow gas exploration with the threat of reducing GST funding.