As part of the NSW gas plan, the government has so far purchased and cancelled 12 Petroleum Exploration Licences (PEL), covering almost 3 million hectares of the state.

It is understood the scheme, which was due to end on Tuesday, has been extended for three months after "multiple title holders" indicated a willingness to sell.

CSG was one of the most controversial issues in the state elections earlier this year, with opposition to the industry blamed for big swings against some National members and the loss of the seat of Ballina to the Greens' Tamara Smith.

The issue continues to simmer, with AGL and Santos both struggling to develop plans for wastewater produced at their exploration sites in Gloucester and the Pilliga state forest, respectively.

AGL last week said it would truck 2.7 megalitres of flowback water from its Waukivory​ project near Gloucester to a waste disposal site at Narangba, north of Brisbane, about 725 kilometres away.

It had earlier been found to be transporting the waste to Newcastle despite written instructions barring the move from state-run Hunter Water. A second treatment site near Windsor later ended its contract with AGL after local opposition.

Santos, meanwhile, has had to respond to a series of objections from state agencies about its plans to develop waste handling ponds for its water at Leewood near Narrabri. Among the issues is how and where the company will dispose of some 500 million litres of concentrated salt waste.

Sydney cancellation sought

The Minister for Industry, Resources and Energy, Anthony Roberts, said the area covered by exploration licences had been cut from more than 60 per cent under the previous Labor government, to about 11 per cent so far.

"We are resetting the regulation of the industry on this government's terms," Mr Roberts said in a statement.

The move to extend the buyback has prompted calls from environment groups for the government to cancel AGL's PEL2, which covers the Sydney basin and expired in 2011.

"PEL 2, which covers almost 8000 square kilometres from the Illawarra, through Sydney's water catchment and up to the Central Coast, should never have been issued because of the unacceptable risks CSG development poses to the critical water supply for Sydney's four million people," Daisy Barham, campaigns director with the NSW Nature Conservation Council.

"The Baird Government does not have to, and should not, renew this licence because CSG development in Sydney's drinking water catchment is simply too risky," Ms Barham said.

A spokesman for AGL declined to state whether the company is considering the surrender any of its licences given an internal review now under way into its CSG operations: "Due to the ongoing nature of the review of the AGL Upstream Gas business, we will not comment on options for that business."

It's understood that the government has paid about $210,000 on average for the buybacks made so far under the program.