North Carolina lawmakers are looking at ways to legalize a controversial type of natural gas drilling and create laws to regulate the practice.

Legislators are moving to overhaul the state's antiquated drilling laws as energy companies evaluate whether to tap into an estimated 40-year supply of natural gas trapped in geologic formations in the state, much of it buried under Lee, Chatham and Moore counties.

State Rep. Mitch Gillespie said Tuesday that the state could also pass legislation that would allow it to collect royalties on oil and gas mining proceeds from drilling operations.

Gillespie, a Republican representing Burke and McDowell counties, plans to introduce a bill Thursday that would require a comprehensive study recommending which state laws are needed to allow natural gas exploration to go forward safely.

"There's no way in the world we can move forward on this until these issues are addressed," Gillespie said during a presentation on shale gas Tuesday attended by about 50 people, including state geologists, environmentalists and regulators.

The discovery of shale gas has raised hopes of an abundant domestic energy source and resulted in a rush of mining activity throughout the country. But the early enthusiasm has been dampened by fish kills and other environmental accidents, prompting some members of Congress to talk about tightening regulation of the industry.

This state's shale gas reserve is in an area measuring about 1,400 square miles. The U.S. Geologic Survey is assessing North Carolina's shale gas potential and is expected to issue its findings in the coming months.

Meanwhile, scores of residents have signed land-lease deals that give energy companies mining rights on their properties, in anticipation of eventual drilling. Energy companies have leased rights to at least 40 square miles in the gas-rich pay zone they hope to explore, said assistant state geologist Kenneth Taylor.

North Carolina law does not allow horizontal drilling, the technology needed to access shale gas formations that tend to be spread out over many miles. Gillespie's bill could lead to legalization of the practice. It will also call for oversight of hydraulic fracturing, the technology used to crack the underground rock formations where shale gas is trapped.

john.murawski@newsobserver.com or 919-829-8932