The risk of spreading toxic groundwater from one of Queensland's worst environmental contaminations has prompted a ban on coal seam gas drilling in an area where companies are already extracting gas.

Key points: Arrow Energy banned from coal seam gas mining within 10 kilometres of the contaminated Linc Energy site

Arrow Energy banned from coal seam gas mining within 10 kilometres of the contaminated Linc Energy site However Arrow and QGC allowed to keep on working within no-go zone on existing, separate mining leases

However Arrow and QGC allowed to keep on working within no-go zone on existing, separate mining leases Some farmers worried about risk CSG could spread groundwater contaminated by Linc

The State Government quietly created a no-go zone for gas extraction 10 kilometres around the former Linc Energy site in the Southern Inland, at Hopeland, burying the decision in an environmental approval issued to Arrow Energy in December.

Despite the ban, Arrow and QGC still have permission to extract gas within the zone.

On a separate, neighbouring mining lease — approved in August — Arrow gained approval to ramp up six existing "pilot" wells for commercial production.

Farmers said they were alarmed by the revelation and want state officials to come clean about the risks of groundwater contamination spreading under prime grazing and cropping land.

Linc Energy's former site is in blue, the white-rimmed circle shows a 10-kilometre radius. Arrow's mine site PL493 has the exclusion imposed, whereas PL253 can extract gas from existing bores. ( Supplied: Department of Natural Resources )

The ban is the first public admission that a burgeoning CSG industry could aggravate the Linc contamination, where toxic gases were released into groundwater by a now-illegal process called underground coal gasification.

Cotton grower Brian Bender's Hopeland property is split by the two Arrow tenements — where CSG extraction is banned on one side but not the other.

"I think it's a bit of a joke, really — there are no lines underground," Mr Bender said.

"I think the whole exclusion zone should be CSG-free, just for the unknown unknowns."

Brian Bender's property is split, with CSG drilling banned on one side but not the other. ( ABC News: Nathan Morris )

The ABC understands tests on groundwater contamination were being examined by a trio of experts who would be called as state witnesses in a criminal prosecution of five former Linc executives next month.

Linc Energy fined $4.5 million

The failed company was convicted and fined a record $4.5 million last May for causing serious environmental harm through its underground coal gasification (UCG) plant.

The District Court heard in that trial that it could take up to 20 years for groundwater to recover from Linc's attempts at the now-illegal UCG process, which allowed toxic gases to escape through fractured rock.

At the time, the state's then-environment minister described the contamination as "the biggest pollution event probably in Queensland's history".

A week before Christmas, Arrow gained approval for 70 wells on a gas tenement to the north-east of the former Linc site.

Cotton harvesting on Brian Bender's property, inside the CSG no-go zone. ( ABC News: Nathan Morris )

It is part of its $10 billion Surat Gas Project, which Premier Annastacia Palaszczuk promoted in a February media release as Queensland's "biggest resources project since 2011".

Ms Palaszczuk's release made no mention of the gas extraction no-go zone.

But the state's Department of Environment and Science approval said Arrow "must not locate any [CSG] production wells within 10 kilometres [of the Linc site]".

Former Linc Energy site at Hopeland, now in the care of the Department of Natural Resources. ( ABC News: Nathan Morris )

"The extraction of groundwater as part of the petroleum activity(ies) from underground aquifers must not directly or indirectly influence the mobilisation of existing groundwater contamination on [the Linc site]," the environmental authority said.

It said the department may force Arrow to model CSG impacts on "groundwater contamination around [the Linc site] at any time" and present its findings within a month.

But there were no such conditions for gas drilling in the neighbouring Arrow tenement that surrounds the former Linc site, where six wells were approved in August.

An Arrow Energy CSG wastewater storage pond near Kogan in southern Queensland. ( ABC News: Nathan Morris )

Arrow was only required to monitor groundwater for early warnings about "changes in groundwater flow direction and quality" from the contaminated site.

Most of that gas tenement is within 10 kilometres of the Linc site, as are existing production wells owned by Queensland Gas Company (QGC), which like Arrow is part-owned by global resources giant Shell.

'Who knows what's happening down under there?'

Farmers at Brigalow just outside the 10-kilometre zone are concerned by its sheer size and the lack of transparency.

Brigalow locals meet to discuss concerns that CSG drilling could spread contamination. ( ABC News: Josh Robertson )

Third-generation farmer Terry Dalgliesh said it was little comfort to learn his property was 3 kilometres beyond the zone.

"Why 10 kilometres? Who knows what's happening down under there [in underground aquifers]?" he said.

"Water issues, subsidence — all those things could be an issue.

"I'm not talking tomorrow but we've got generations to come on and it's going to be left for them and they've got to try and clean up the mess that this generation created."

Terry Dalgliesh said it was little comfort to learn his property was three kilometres beyond the exclusion zone. ( ABC News: Josh Robertson )

Brigalow crop farmers Daniel and Melissa Wegener helped secure the district's official status as strategic cropping land a decade ago.

"It's disappointing because we fought for that and now it's basically been white-anted," Ms Wegener said.

"Why can't they put a moratorium on the [CSG] lease until there are answers available for everyone?

"Some independence [in oversight] would be good too."

Mr Wegener said landholders were worried about how long groundwater contamination could be an issue.

"Is it a 10, 20-year thing? Or is it going to be you know, 50, 60, 100, more [years]?"

Daniel and Melissa Wegener helped secure the district's official status as strategic cropping land a decade ago. ( ABC News: Nathan Morris )

Contamination risks overstated, grazier says

However, grazier Toby Trebilco has a property next to the former Linc site and said suggestions that his land or water could be contaminated were hurtful and false.

He said he did not know about the drilling ban until approached by the ABC, and believed it overstated the contamination risks.

"I find that totally unacceptable because on the first of March 2018, we were told by an [environment department] officer in our home, that our environment was perfect and there was nothing wrong," Mr Trebilco said.

"Just look at that grass, look at our cattle, look at our trees — that major waterway that comes from Linc just through here, the water's been tested — it's perfect.

"Even the underground bores — perfect. What more can I say?"

The gas drilling exclusion zone mirrors an earlier ban on deep excavation across the same area because of the risk of hydrogen explosions.

The digging ban was lifted in early 2018.

Grazier Toby Trebilco said suggestions his land or water could be contaminated were hurtful and false. ( ABC News: Nathan Morris )

In 2017, the environment department revealed testing had found gas-contaminated soil 25 kilometres further south of the excavation exclusion zone.

A spokesman for the Department of Environment and Science said the conditions on the two Arrow leases near the former Linc site were different because they covered "activities that are different in scale and intensity".

He said the 10-kilometre buffer was "based on groundwater modelling and is to minimise potential impacts from the former Linc site".

"The department has extensively engaged with the local community, including surrounding landholders, about the former Linc Energy site and resource activities in the area, and continues to do so," the spokesman said.

He said the Government had done "considerable work to monitor and manage the site's environmental impact including installing a groundwater monitoring network".

"The department maintains that this is not an exclusion zone as other activities which support production can still occur within this area," he said.

"For example, these activities can include the drilling of monitoring bores, the installation of piping, fencing and roads."

An Arrow spokesman said under the lease it gained around the old Linc site in August it was allowed to "commercialise gas from six existing pilot wells only".

"It does not permit any further CSG wells," he said.

The former Linc site was not part of the lease, he said.

QGC was contacted for comment.