Mr King said coal-seam methane developments require as little as $20 million in capital but in addition to having the advantage of being close to the country's existing pipeline network, there is more than enough supply to meet future demand in Australia.

"The next new resource to clear is the one closest to the market, that requires the least capital," Mr King said.

The Origin Energy boss said coal-seam methane along with offshore discoveries in the Otway Basin would supplement Australia's two main sources of existing supply, namely, the Cooper Basin and Bass Strait. "They will essentially form the third major source of supply," Mr King said.

Proponents of the PNG gas project have argued that only their project can supply the large volume of low-cost gas needed in Australia.

Origin has a 85 per cent stake in Oil Company of Australia, which is the nation's largest supplier of coal-seam methane and is currently vying for Queensland Government approval to develop a gas-fired power station in Townsville.