The policy has been widely criticised by industry but the new party is on track to poll well in this year's NT election.

Territory Alliance leader Terry Mills cites widespread community concern and the unviable economic case of this "controversial practice".

There is no "social licence" for fracking, he says, amid concerns about the impact on groundwater.

Territory Alliance would not issue production permits or renew existing exploration licences and "would subject current operations to tough community and environmental safeguards".

This a radical departure from Mr Mills' position in late January when he wrote an article in the Sunday Territorian newspaper supporting fracking and an onshore gas industry because of the "economic and environmental benefits".

The Gunner government has been a strong proponent of using the NT's onshore and offshore gas to kickstart a manufacturing hub involving businesses such as chemical and fuel processing plants.

Territory Alliance, founded by former Country Liberal chief minister Mr Mills, is less than nine months old but a recent MediaReach poll put it on target to win more seats than the CLP at the August 22 election and possibly as many as Labor.

If it were able to ban fracking, it would force the onshore gas industry to shut down, Australian Petroleum Production and Exploration Association NT and South Australia director Matthew Doman says.

"Hydraulic fracturing (fracking) is part and parcel of the safe, sustainable development of those resources," he told Mix FM.

"These are legitimate questions, but they were all answered by the Pepper independent scientific fracking inquiry that was conducted over an almost two-year period, and all of those concerns were found to be either unfounded or can be managed by an appropriate regulatory regime.

"The Northern Territory has that now in place, so we know we can do this safely and the benefits will be very considerable."

The Gunner government lifted a two-year moratorium on fracking in 2018 after the independent scientific inquiry by Justice Rachel Pepper found the risks could be managed and regulated.

Mr Doman rejected claims by Mr Mills and Protect Country Alliance anti-fracking spokesman Graeme Sawyer that with low gas prices, the industry was no longer viable, saying the downturn was due to COVID-19.

Chamber of Commerce NT chief executive Greg Ireland and Master Builders NT chief executive David Malone said banning fracking in the middle of an economic crisis would jeopardise thousands of new jobs, and revenues for local companies and the Territory government.

NT Treasurer Nicole Manison said onshore gas would be an important part of diversifying the economy and warned energy companies currently in the territory might sue for compensation.

"We've got an opportunity with the gas industry not only to provide cheaper energy but with the use of gas in manufacturing and products you can make from it," she said.

Australian Associated Press