The NSW Department of Planning approved the company's application for the 335 hectare property last month.

Spudded on Monday, well SL02 is expected to reach a total depth of 767 metres, after intersecting the Bulli seam at 647m, the Balgownie seam at 662m and the Wongawilli seam at 706m.

SL02 will be fracture stimulated in multiple zones and after completion will be connected to the Rosalind Park Gas Plant, Sydney Gas said.

Last Wednesday, well EM40 on the Elizabeth Macarthur Agricultural Institute was cased and cemented ready for perforation and fracture stimulation, the company said.

The well was drilled directionally into the coal reservoir in the Glenlee area to a 844-metre total depth, intersecting the Bulli seam at 789 metres and the Balgownie seam at 810 metres.

Sydney Gas said EM40 intersected the coal reservoir in the Glenlee area, even though it was located in EMAI.

The company said it intended use the directional drilling technique in the future to drill or access additional reservoirs from a single drill site.

Last month, Sydney Gas announced it proposed to be renamed as Wollemi Energy, after the recently rediscovered Wollemi pine tree.

Sydney Gas shareholders will vote on the new name at the November 25 AGM.