* Fifth Australian state blocks fracking
* WA ban is temporary pending an inquiry (Adds response from industry and environmental groups, detail and background)
SYDNEY, Sept 5 (Reuters) - Western Australia state (WA) will ban onshore hydraulic fracturing while it looks into the risks associated with the drilling technique, its environment minister said on Tuesday, making it the fifth Australian state to restrict the process.
The state of Victoria has banned hydraulic fracturing, or "fracking," as well as shale and coal-seam gas exploration, while the Northern Territory, New South Wales and Tasmania have moratoriums.
The blocks come despite a growing gas supply crisis in Australia, where a large portion of supply in the continent's east is drawn from coal seam developments.
However, farmers and environmental groups are worried that groundwater reserves could be depleted or contaminated by both conventional and unconventional onshore gas drilling.
The Western Australian moratorium was promised to voters by the state's center-left Labor Party, which won office at an election in March.
"We appreciate there is a level of community concern around fracking in WA, which is why we are commissioning an independent scientific inquiry," said Environment Minister Stephen Dawson in a statement posted on his website.
The inquiry will be run by Tom Hatton, chair of the WA Environmental Protection Authority and examine the effect of fracking on the environment, water, agricultural productivity and the community, according to its website.
The pause on fracking freezes more than A$380 million in investment in new onshore projects, said chief operating officer of Australian Petroleum Production and Exploration Association WA, Stedman Ellis, in a statement.
Listed explorer Buru Energy Ltd said it was assessing the effect of the moratorium on its oil an gas exploration licenses in Western Australia's Canning Basin.
"We are confident that this upcoming scientific inquiry will come to the same conclusion as all previous inquiries, that the industry is safe if properly regulated."
The temporary ban in WA was welcomed by environmental group Lock the Gate Alliance, regional coordinator Simone Van Hattem told Reuters by phone from Bindoon, northwest of state capital Perth.
"We're relieved that the government is finally listening, farmers have been working hard to send that message," she said. (Reporting by Tom Westbrook; Editing by Christian Schmollinger and Gopakumar Warrier)