The NSW Environment Protection Authority has criticised AGL for a lack of transparency and launched a "full investigation" after the energy giant disclosed it had detected banned BTEX chemicals in water samples taken at its pilot coal seam gas field in the state's mid-north.

AGL copped a rebuke by the EPA on Tuesday, hours after the company announced it had suspended operations near Gloucester following the detection of the toxic chemicals – benzene, toluene, ethylbenzene and xylenes – in water from two of its four CSG wells and an above-ground water storage tank.

AGL has halted its CSG operations in Gloucester. Credit:Ryan Osland

"AGL informed the EPA that it was aware of these elevated levels of BTEX chemicals on 15 January, but it did not make these results known to the EPA or the public until today," Mark Gifford, EPA Chief Environmental Regulator, said in a statement released late on Tuesday.

"The EPA is very concerned at AGL's lack of timeliness and transparency in informing us of these results and we will be conducting a full investigation," Mr Gifford said.