With the support of an approved Narrabri Gas Project, the project could even be declared part of a state government special activation precinct, like the $184 million Parkes rail hub, the Deputy Premier announced on Tuesday.

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Narrabri Mayor Cathy Redding told Australian Community Media the industrial precinct project isn't dependent on the $3.8 billion mining scheme.

"The approval for Santos, if it comes through, is really our ace in our hand. It will provide a diversity of industry that is not available without gas," she said.

"The potential of that approval just gives us that advantage, probably over any other industrial and logistics site in NSW."

But Deputy Premier John Barilaro said the 850 coal seam gas well project outside Narrabri, which is currently before the Independent Planning Commission, would turn a major project into a massive one.

"With special activation precincts, you need a big catalyst project," he said.

"I believe it's got merits for a special activation precinct; let's just wait for the Santos decision. I think the Santos decision will give us an idea what this area would look like if gas is approved.

"There's a whole heap of energy businesses that actually want to come here [if the CSG project is built]. This precinct could actually double, triple, quadruple in size. You could easily do a special activation precinct.

"If the gas doesn't happen, there's still an argument here for a special activation precinct, but we just need to work that out once that decision's made."

Mr Barilaro travelled to Northern NSW to make three major project funding announcements.

The state government will underwrite stage one of the inland rail scheme to the tune of $16.8 million.

He also announced the state would pour $9.45 million into new laboratories at the IA Watson Research Centre, at Narrabri. The funding will help to develop a new International Crop and Digital Agriculture Research Centre outside the town, set to create 40 new research positions.

The Deputy Premier also announced a major upgrade to the Gunnedah saleyards.

Cr Redding said the state government funding gives Narrabri shire "the surety that this project is going ahead".

She said the inland rail scheme "gives a certainty to the future of the Narrabri shire and the future is going to be very bright."

The industrial precinct and freight exchange will house the proposed ammonium nitrate and baking soda manufacturing hubs Santos said could follow development of the $3.8 billion scheme.

The inland port is expected to create 1000 jobs on its own.

State government money will help pay for essential infrastructure including water, electricity and communications connections that operators need to relocate close to the Inland Rail route.