A project application lodged with the NSW Department of Planning said the high-pressure gas pipeline would stem from the Narrabri to Wellington pipeline adjacent to Coolah, linking the proposed terminal at Kooragang Island to the company's Narrabri coal seam gas project.

The pipeline to Newcastle would run from Coolah, crossing the Hunter River for the first time east of Denman, cut through Lake Liddell and travel through the areas of Dyrring, Mitchells Flat, Elderslie, Stanhope, Hillsborough, Gosforth and Maitland Vale, before passing through Largs, Morpeth, Woodberry, Tarro and Hexham.

The pipeline would cross seven highways and five railway lines.

The company entered into a memorandum of understanding with Hitachi and Toyo Engineering to conduct a technical and financial feasibility study for the construction of a 1 million tonne a year liquefied natural gas plant on Kooragang Island.

The plant would have the potential to expand to 4 million tonnes, under a joint venture between Eastern Star Gas and Santos.

The pipeline would also supply natural gas to Hexham, which would enable it to tie into the existing NSW gas grid and improve security of supply for Newcastle and Sydney.

It could also potentially supply Bayswater power station.

The project application said demand for gas in Newcastle and Sydney might exceed supply from 2013 and Sydney customers "have already suffered supply interruptions".

The company said the export terminal project would be worth up to $2.5 billion if fully developed, including a pipeline to the site.

The Greens have criticised the proposed export terminal and said its approval would be a green light for coal seam gas projects across the state, despite limited oversight of the industry and community concern.