The NSW Farmers' Association said the uncertainties surrounding the industry were having a corrosive effect on rural society and more blockades would take place unless farmers were given the power to say no to gas extraction.

The state's two largest coal seam gas companies, Santos and AGL, took a conciliatory line at the NSW upper house inquiry hearing in Sydney yesterday.

Both said they were listening to the concerns of landholders, and Santos announced that ''as an act of good faith'' it had withdrawn plans for the controversial proposed Mullaley gas pipeline that would have run from Narrabri to Wellington.

The farmers' association has written to all 20 coal seam gas companies in NSW, asking them to request that the state government pass legislation giving farmers the right to say no to drilling on any of their land. At present, if agreement cannot be reached over land access, the parties must attend arbitration, but there is ultimately no legal right to refuse coal seam gas exploration.

''We reject the notion that it's somehow fair to be told your options are 'sign this document, or we'll drag you through arbitration and have the arbitrator sign it for you' - that's essentially negotiating with a gun to your head,'' the president of the farmers' association, Fiona Simson, said.

''To protect our communities and ensure they are treated fairly and with respect, the most basic step is to put the ball back in their court.

''To put it simply, farmers do not want assurances from coal seam gas companies, they want assurances written into law.''

Santos said it had been developing good relationships with landholders while drilling for coal seam gas in Queensland during the past 15 years.

''Santos is committed to demonstrating through scientific evidence that any adverse impacts will be avoided,'' the company's vice president for eastern Australia, James Baulderstone, said.

''We believe our operations will be shown to enhance rural communities in general, and in particular the productivity of landholders who choose to work with us.''

The company said calls for a moratorium on drilling until more data was available on the industry's impact on underground water supplies would damage the industry's future.

AGL representatives told the inquiry that only 6 per cent of the gas used by households and business in NSW was extracted in the state, the rest coming from Queensland and Victoria.

Read more: http://www.smh.com.au/environment/water-issues/farmers-push-for-right-to-veto-coal-seam-gas-projects-20111117-1nl7j.html#ixzz1eJEccSjT