A coal seam gas project operated by energy company Santos in north-western NSW has contaminated a nearby aquifer, with uranium at levels 20 times higher than safe drinking water guidelines, an official investigation has found.

It is the first confirmation of aquifer contamination associated with coal seam gas activity in Australia - a blow to an industry pushing state and federal governments for permission to expand.

In waiting: Grazier and protester Ted Borowski lies in a dry creek bed ready to disrupt drilling operations in the Pilliga forest by locking himself to a truck. Credit:Dean Sewell

Santos was fined $1500 by the NSW Environment Protection Authority, which posted a media release on its website on February 18, without identifying the nature of the contamination.

Two days later, Deputy Premier Andrew Stoner signed a memorandum of understanding with Santos to speed up the project, in the Pilliga forest near Narrabri, guaranteeing a decision on its future by January 23 next year.