The Parliamentary Commissioner for the Environment says fracking can be done safely in New Zealand as long as it follows best practice.
Jan Wright released her interim report on Tuesday which did not recommend a moratorium on fracking as some environmentalists were seeking.
Fracking, or hydraulic fracturing, involves pumping fluids under pressure into rocks underground to expand cracks and get at trapped pockets of oil or gas, and has been practised in New Zealand for 23 years.
Environmentalists say it can damage aquifers, but drillers deny this and says it boosts productivity.
Dr Wright said she came to a similar conclusion to the Royal Society in Britain, which is that fracking is safe if properly managed.
"Recommending a moratorium is a big thing to do and I wouldn't do it lightly. It's a business employing lots of people with livelihoods at stake here.
"But I am the Environment Commissioner. I've not seen anything yet that is of high and urgent concern, but that is not to say that everything's been done perfectly so far."
However, she has raised concerns about what she called fragmented, complicated and light-handed regulations.
The question of a need for tightened regulations will be detailed in her full report, to be released in 2013.
Energy and Resources Minister Phil Heatley says officials have been instructed to produce clear guidelines on the respective roles of central and local government in relation to the control of fracking.
"The Parliamentary Commissioner for the Environment has taken a pretty balanced view. She doesn't believe that a moratorium is justified.
"She might change her mind in six months, and we'll take her views very seriously as we are now."