Abstract This feasibility study is a response to the increasing of interest in coal seam gas (CSG) in Australia and due to the demands for alternative fuels by high fuel-consumption industries such as agriculture. A technical analysis of LNG as an alternative fuel to diesel in agriculture was conducted. A comparison of different conversion methods (dual-fuel and mono-gas systems) is undertaken. Data was collected from a number of sources to determine the potential demand for natural gas in the agricultural sector in Queensland (QLD) and New South Wales (NSW). This paper aims to evaluate the payback period when CNG/LNG is used as an alternative fuel for diesel engines in different applications. The payback period of 1000Ha (of wheat planted and harvested) was found to be 3.99year when CNG is used (no till, harvest), while the payback period was found to be 25years when LNG is used. As for water pumping, it was found that the payback period was 0.9years when CNG is used, while the payback period was found to be 3.93years when LNG is used. Analysis finds compressed natural gas (CNG) to be the preferred alternative fuel to diesel engines in the agricultural sector.