Underground coal gasification (UCG) will be banned in Queensland due to its environmental impact, Mines Minister Dr Anthony Lynham says.

Key points: Mines Minister to introduce UCG ban legislation to State Parliament by end of year

Mines Minister to introduce UCG ban legislation to State Parliament by end of year Potential risks to environment, agricultural industries far outweigh any potential economic benefits, Minister says

Potential risks to environment, agricultural industries far outweigh any potential economic benefits, Minister says UCG has been proven to be dangerous and polluting, Lock the Gate Alliance says

He said the ban would start immediately as Government policy and he would introduce legislation to State Parliament by the end of the year to make it law.

There had been only three UCG pilot projects in Queensland — Carbon Energy near Dalby, Cougar Energy near Kingaroy and Linc Energy at Chinchilla.

Dr Lynham said no-one had made a success of UCG yet and potential revenue was not worth the environmental risk.

"We have looked at the evidence from the pilot operation of UCG and we've considered the compatibility of the current technologies with Queensland's environment and our economic needs," he said in a statement.

"The potential risks to Queensland's environment and our valuable agricultural industries far outweigh any potential economic benefits.

"UCG activity simply doesn't stack up for further use in Queensland.

"We had three trial sites here in Queensland — the trial sites now have to be decommissioned."

Environment Minister Steven Miles said the Linc Energy project near Chinchilla was "the biggest pollution event probably in Queensland's history".

"Certainly the biggest pollution investigation and prosecution caused — it is alleged by the Environment Department — by the activities of Linc Energy at their underground coal gasification site," he said.

Lock the Gate Alliance activist Drew Hutton said the ban was very important step given UCG had been proven to be dangerous and polluting.

"I told the State Government these technologies should be banned six years ago - it's a no-brainer that burning coal underground and shale oil are a bad idea," he said.

"I'm pleased that the State Government has finally decided to agree with me to help protect Queensland landholders and farmers, their land and their water."

Call to publicly release 'complete set of evidence'

However, Queensland Resources Council (QRC) acting chief executive Greg Lane said it was very disappointed with the Palaszczuk Government's decision, which had no consultation.

"This unexpected announcement of another commodity ban without the release of the triggering evidence can only raise concern for business confidence and investment in this state," Mr Lane said.

"It is just three years since the Office of Chief Scientist's review confirmed the 2012 Independent Scientific Panel's conclusion that 'underground coal gasification could, in principle, be conducted in a manner that is acceptable socially and environmentally safe when compared to a wide range of other existing resource-using activities'.

"QRC therefore calls on the Government to make public the complete set of evidence it now apparently has that shows the environmental risks of UCG projects of any kind are too high."

Company placed into administration

Meanwhile last Friday, oil and gas company Linc Energy was placed into administration, with PPB Advisory being called in to work with Linc's management on options including a possible restructure.

In a statement to the ASX on Friday, the company said after receiving legal and financial advice and considering commercial prospects the board decided it was in the best interests of the company to make the move.

It came one month after the company was committed to stand trial on five charges relating to breaches in Queensland's environmental laws at its UCG site.

The state's environment department accused the company of wilfully causing serious harm at its trial site near Chinchilla on the Darling Downs.

Mr Hutton said on Friday that Linc Energy could face up to $56 million in fines if found guilty.

But he said the penalty might never be paid, as going into administration was a common legal manoeuvre to dodge fines and costly clean-ups.