Santos has accepted more than 100 conditions of approval for its Narrabri coal seam gas project from NSW authorities, which has bolstered its chances of federal approval.

The NSW Independent Planning Commission on Wednesday approved the controversial $3.6 billion project for 850 gas wells over 20 years.

Environmentalists and farmers said coal seam gas mining threatened water, soil and air quality. Santos said the project was safe and had the potential to provide up to half of the state’s natural gas needs.

Santos managing director and chief executive Kevin Gallagher said the NSW decision was a major step forward, however the company still needed federal and other approvals.

Yet management believe the NSW assessment should satisfy federal authorities.

“The IPC outcome confirms that we have relied upon the best science to ensure the Narrabri Gas Project can be delivered safely and sustainably,” Mr Gallagher said.

Santos said it would start planning workover activities on existing wells.

If all approvals are received, there will be 12 to 18 months of appraisal drilling. This will provide more information for those steering the lengthy project.

Shares were trading lower by 2.17 per cent to $4.97 at 1151 AEST.