The company said it tested groundwater and surface water samples for Tolcide (also known as THPS or hydroxymethylnasulfate) from eight locations, upstream and downstream from the pilot site before, during and after hydraulic fracturing operations.

Tolcide - used to prevent bacterial growth in gas wells - is also used in the dairy industry as a cleanser.

The results of the testing were handed to AGL yesterday (Tuesday).

“The results came in today and all groundwater samples tested less than the laboratory test limit of detection for THPS, which is 50 parts per billion,” AGL’s group general manager of upstream gas Mike Moraza said.

“All surface water results showed THPS levels at less than the limit of detection, with the exception of two; one from upstream of the site and another downstream.

“However, these results, at 57 and 59 parts per billion, fall within the margin of error limits for the laboratory tests.”

AGL has been under fire from opponents of coal seam gas after it emerged it had fracked four wells near Gloucester before the EPA (Environment Protection Authority) had approved testing for the chemical.

“AGL’s report states that the EPA didn’t approve the methodology for testing Tolcide levels until December 19, after all four wells had been fracked,” Groundswell Gloucester’s John Watts said.

The EPA revealed last week that AGL had informed its office that ground and surface water monitoring data from its Gloucester operations during November had detected “extremely low levels” of another chemical used in fracking.

Monoethanolamine borate is a chemical used in the hydraulic fracturing process to alter the viscosity of the fracture stimulation fluid.

An EPA spokeswoman said all chemicals used in the fracking process had been subject of a risk assessment and approval by Office of Coal Seam Gas.

“OCSG determined that the chemicals to be used were fit for purpose, including THPS and borate,” the spokeswoman said.

Mr Moraza said he was confident the results from most recent round of testing proved the fracking process was safe.

“Neither of the (elevated readings for Tolcide) coincides with detections of the other reportable component of hydraulic fracturing fluid, Monoethanolamine,” he said.

“We believe the fact the detections are nil, negligible and isolated from each other strongly indicates these trace level readings are not from hydraulic fracture stimulation.

“We understand the community’s concern for the safety of local water resources and we take our responsibility to protect water very seriously.

“Our monitoring and testing regime is of the highest standard. I don’t know of any more thorough testing in this industry than what we have been required to do for our pilot at Gloucester.”

Despite this, an AGL spokeswoman said the results had prompted a full review of the sampling and testing process for its November 2014 water monitoring.