The Green Party says a moratorium on fracking is still needed as too many doubts remain over the safety of the practice.
In an interim report released on Tuesday, the Parliamentary Commissioner for the Environment found there was potential for fracking to contaminate water and cause earthquakes, but did not recommend a moratorium.
Jan Wright said fracking can be done safely in New Zealand as long as it follows best practice, though she raised concerns about what she called fragmented, complicated and light-handed regulations.
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.
Green Party energy spokesperson Gareth Hughes says he is surprised and disappointed by the report, and maintains there should be a moratorium.
"The Parliamentary Commissioner herself can't be confident that we do have regulation in force as best practice.
"So until that question is clarified and all the other large number of questions are answered we think it would be responsible to have a moratorium given we're on the cusp of a massive expansion."
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.
Consent conditions vary
Local councils are being urged to work with the Government to create consistent national guidelines for fracking consents.
The Commissioner's report found each council around the country has its own plans, and conditions in consents are likely to vary widely.
Local Government New Zealand president Lawrence Yule says councils that have experience of fracking carried out in their area, such as Taranaki Regional Council, need to work with others to come up with best practice guidelines.
Mr Yule says technical experts on fracking need to be brought in to some councils which are struggling to understand the technicalities.
A Hawkes Bay regional councillor Liz Remmerswaal says her council lacks the expertise to issue licences for fracking and is calling for the practice to be stopped until they feel more confident to proceed further.
"The councils aren't really geared up with the right regulations to deal with all the myriad issues and the government oversight is just not there. We're actually not ready even to receive these applications."