The Coal Seam Gas industry is coming under increasing pressure to prove it can operate without damaging natural resources such as freshwater aquifers or agricultural land.

Coal Seam Gas company Arrow Energy last week announced the discovery of small traces of carcinogenic chemcials from banned BTEX chemicals (benzene, Toluene, ethylbenzene and xylene) in monitoring bores near Dalby.

It is the latest in a series of contamination incidents in Southern Queensland over the past year that have called the industry's environmental credentials into question.

Queensland Premier Anna Bligh told the media that the detection was a positive sign that protection mechanisms were working.

The Queensland Department of Environment this morning said the bores had no connection to gas production, the traces found were "minute" and the reading was most likely caused by the remnants of lubricant used to drill the monitoring holes.

Last night three of Australia’s top independent water scientists said more research was “urgently needed” to find a solution to the millions of tonnes of salt that the CSG industry will bring to the surface before further developments can be allowed to proceed.

There were further negative headlines for the industry when coal mining magnate Clive Palmer said he had been told by a leading Chinese Gas company that extraction techniques currently used in Australia were abandoned in China 20 years ago, and had the potential to poison the water table and destroy the land.

In the face of outrage from the CSG sector Mr Palmer has since issued a statement to clarify his comments, saying the he supports the industry, but still called on Government regulators to ensure mining companies use best practice and the best available technologies.

Environment and water minister Tony Burke told ABC Lateline last night that every single aquifer exposed to coal seam gas mining must be tested ensure groundwater is not at risk.

“For each one, if it's water-tight and the companies are right, then you don't have an impact on groundwater.

“If it's not water-tight, if it's in fact porous and it is connected to the groundwater system or the Great Artesian Basin, then in those instances you either have to re-pressurise or re-inject the water after you've taken the gas out.

“That makes sure we've taken a precautionary approach and that we don't end up with some of the environmental dangers that some people fear.”

Lock the Gate Alliance president Drew Hutton said the NSW state government has neglected to to inform prospective buyers in south-west Sydney that AGL plans to drill coal seam gas wells within 200m of homes in their area.

The Lock the Gate Alliance is calling for an immediate moratorium on all CSG development until the full social and environmental impacts of the gas rush are adequately assessed.

"There are gas fields in Queensland where local residents are 200 metres away from drill rigs and their lives are hell," Mr Hutton said. "Gas wells leak, sometimes to ignition concentrations, and, of course, in a city there are always ignition sources.

"Gas wells have also had blow-outs, as have gas pipelines and gas migrations have also endangered lives in Queensland.

"Drill rigs also work around the clock and with extremely bright lights, making it difficult for nearby residents to sleep.

"Clearly, the state government must now acknowledge the woeful lack of planning that surrounds this industry and announce an immediate moratorium on all development until the full social and environmental impacts are properly assessed," Mr Hutton said.