Linc Energy's underground coal gasification plant in Queensland was built using cheap, unsafe and illegal equipment, a former engineer at the company claims.

Key points: Former mechanical engineer's witness statement includes claim company was attempting to manipulate stock market

Former mechanical engineer's witness statement includes claim company was attempting to manipulate stock market Qld mines department says structural compliance issues had been resolved

Qld mines department says structural compliance issues had been resolved Linc Energy founder denies there were problems at the plant caused by fracking

Explosive allegations in mechanical engineer Dennis Orford's witness statement to the Queensland Environment Department, obtained by the ABC, include a claim the company had no serious intention to produce fuel but was instead attempting to manipulate the stock market.

The Environment Department has brought criminal charges against Linc Energy over serious environmental harm allegedly caused by its plant at Chinchilla west of Brisbane.

The company is accused of polluting up to 320 square kilometres of prime agricultural land with toxic and explosive gases. It has denied the charges.

Former workers have blamed gas leaks for headaches, nausea, chest pain and other health problems.

The fresh allegations by Mr Orford raise questions about earlier regulation of the plant.

The experienced mechanical engineer oversaw the procurement of above-ground equipment including high-pressure reactor vessels from South Africa and the US in late 2007 as activity at the experimental plant ramped up.

He told investigators none of the equipment had complied with Australian standards. But he said that after he complained and refused to install it, Linc Energy had sacked him.

"Everything was backyard built ... in a completely reckless manner that showed no regard for any engineering expertise that you'd need to put into a petroleum plant," Mr Orford told investigators in his statement.

"It was just a piece of stuff put together by amateurs. Even things like walkways and ladders didn't comply with Australian standards. Everything you looked at was like that, it was non-compliant or wrong."

Mr Orford said he had been particularly concerned about the main gas-to-liquids reactor at the plant, which operates at more than 400 times atmospheric pressure and is designed to contain explosive and toxic gases and liquids including hydrogen and carbon monoxide.

"I could see overt porosity in the welds of the main pressure containment area. I asked the fabricator for records ... but there were none," he told investigators.

"Without those records, the equipment could not be legally installed."

'Linc tried to patch these holes up with rags, bits of gaffer tape'

Mr Orford complained to Linc's senior management, but in January 2008 he was sacked. By then, he said, Linc had found other engineers who were willing to install the equipment.

Mr Orford said the company had also ignored a civil engineer's instructions and laid the concrete slab supporting the plant without allowing for the unstable soil underneath.

"You can't build a petroleum plant on an unstable base and so right from the outset we've got a combination of unqualified, unsupported, inappropriate, unserviceable foundations on top of which I was asked to bolt a 20 metre tower with a high temperature, high pressure reactor which was also not compliant."

Underground coal gasification In the UCG process, underground coal seams that are difficult to mine conventionally are ignited and water is introduced. The resulting gases from the part-burned coal are extracted and processed above ground to make fuel or other hydrocarbon-based products.

The technology has existed for more than a century but has failed to surmount environmental and technical problems. Safe and reliable operation is only possible under certain geological conditions.

The only full-time commercial UCG plant in operation, in Uzbekistan, is owned by Linc Energy.

In Queensland, the Beattie and Bligh Labor state governments encouraged underground coal gasification activities, including the Linc Energy Chinchilla plant, as an alternative energy source during a period of high oil prices.

But since 2010 successive state governments have wound back UCG amid a series of safety and pollution incidents. The Palaszczuk Labor government last month banned it entirely.

The Queensland mines department told the ABC it had identified "compliance issues" with the plant in January 2008 including that the company had begun construction without the required licence and problems with the slab.

But it said these issues had later been resolved.

It had "no current concerns for the safety of workers or visitors in relation to the site".

In underground coal gasification, coal seams are burned underground after pathways are created, usually by injecting water under high pressure in a process called "fracking".

The gases given off are then processed into fuel or other products.

Mr Orford told investigators that in December 2007 Linc ignited the underground coal seam as a trial, but it was a dangerous failure because the company had used air instead of water for the fracking.

He said in his statement:

"Linc hadn't done their fracking correctly and they'd broken into a saltwater aquifer ... it had been raining so there were puddles of water everywhere. We could see masses of bubbles coming up through puddles in the ground ... a clear indication of excessive fracking and loss of containment."

Mr Orford said that as the brackish water and the gases from underground combined, the mixture quickly corroded pipework.

"Linc tried to patch these holes up with rags and bits of gaffer tape," he said in his statement.

Mr Orford claimed that contrary to what Linc told investors, politicians and the public, its main intention was not to produce fuel at the plant.

"My impression of Linc was that [they] were there to boost up their share price so they could do what is known as a pump and dump. This is where they start off with a heap of shares that are worth two cents, spruik up this technology to talk them up in the market and when they get to $5.00 they sell them.

"My impression was that Linc was really about manipulating the share market. I don't think they were really interested in getting the technology to work apart from sort of trying to impress investors and impress the market that they could do this fantastic thing."

Linc Energy founder denies allegations

Mr Orford had been expected to appear as a witness during the hearings at the Magistrates Court in Dalby, but was not called.

In a statement to the ABC, Linc Energy founder Peter Bond denied Mr Orford's allegations.

Peter Bond, CEO and founder of Linc Energy, said the gas-to-liquid plant had been a success. ( AAP: Andrew Taylor )

He said the concrete slab and the paperwork for equipment from South Africa had been independently verified.

Mr Bond denied there had been problems caused by fracking.

"We didn't have bubbles everywhere, that's untrue," Mr Bond said.

"The problem wasn't too much fracking, the problem was we actually couldn't frack the coal ... the way we needed to. It was the actual reverse, we couldn't reach the metres we needed to."

The gas-to-liquids plant had been a success, he said, and had turned gas produced from coal into diesel and jet fuel.

Linc Energy's Australian operations are in liquidation following the appointment of voluntary administrators in April when the company faced debts of almost $300 million. It filed for bankruptcy protection for its US subsidiaries this month.

Mr Bond last month became the first person to be served with an Environmental Protection Order under the Queensland Government's new "chain of responsibility" laws designed to hold people who benefit financially from resource projects responsible for environmental clean-up costs.

The environment department has asked Mr Bond for a bank guarantee of $5.5 million to cover these costs. It has since issued notices under the laws to 14 other people linked to the company.

The Queensland Environment Department said the prosecution of Linc Energy was "unaffected by the liquidation of the company". It declined further comment.