Advent Energy, which has government approval to extract gas and holds the state's only offshore petroleum licence, said its first exploration well would be directly east of Newcastle.

The well is about 55 kilometres from Newcastle, and about 30 kilometres from the nearest land site at Boat Harbour.

Advent has contracted the 2560 megaton rig Ocean Patriot to conduct the drilling.

The executive director of Advent's parent company MEC Resources, David Breeze, said earlier this month it would be the first time such drilling had occurred off the NSW coast.

"The state and federal governments are looking for gas as a source of electricity generation," Mr Breeze said.

"Gas-fired power stations produce 60 per cent less carbon dioxide emissions than coal-fired power stations."

The objective of the project is to drill a well 826 metres below the ocean floor and to test for the presence of gas.

Advent is licensed to explore an 8100-square-kilometre area from Wollongong to Newcastle.

Gas reserves in the area are estimated at 13.2 trillion cubic feet and valued at about $50 billion.

The gas could also have industrial and domestic uses, and the project could create 300 full-time and 2000 construction jobs.