An environmental group says food production in eastern Taranaki could be harmed if Solid Energy goes ahead with coal seam gas extraction in the area.
The state-owned enterprise said on Wednesday it had potentially massive gas reserves in coal seams there and would start assessment of its commercial viability.
While any coal seam gas production is years away it is possible the controversial fracking technique will be used. Fracking is used where the gas flow is weak and involves pumping large volumes of a fluid with some chemicals at high pressure down the well causing the coal seam to fracture.
Solid Energy says it has used fracking safely at a trial plant near Huntly.
The Parliamentary Commissioner for the Environment is investigating fracking but the Government has rejected calls for a moratorium until findings have been released.