THE Baird government has suspended AGL's licence to operate its pilot coal seam gas field in northern NSW pending the result of an investigation launched on Wednesday, Energy Minister Anthony Roberts said.
The Department of Resources and Energy has also dispatched investigators to inspect the four CSG wells near Gloucester.
They will join counterparts from the NSW Environment Protection Authority, which has begun its own probe into the energy giant's operations.
The joint probe comes a day after AGL said it was "voluntarily" suspending work at the site after it had detected banned BTEX chemicals in flowback water from two of the wells and in an above-ground water storage tank.
Meanwhile, NSW Labor leader Luke Foley has called for a "independent inquiry" into AGL's conduct at Gloucester.
"Given its chequered record, the Baird government must allow its own actions to be scrutinised in that inquiry," Mr Foley said.
"This woebegone episode is a perfect demonstration why NSW needs an urgent moratorium on coal seam gas activity - including Gloucester. Only Labor will implement that moratorium.
"AGL has been allowed to wander off the reservation because of lax Baird government oversight.
Clearly, the company’s disclosures have been less than forthcoming - but the regulator has gone missing when it should have been nipping at its heels.
“Just last week, the Baird government rubber-stamped AGL discharging flowback water from its fracking activities into the Hunter sewage network. We now need rigorous analysis to establish whether BTEX contaminant has reached there."
AGL has attributed the presence of the toxic chemicals - benzene, toluene, ethylbenzene and xylene - to natural sources, saying it had not used them in its own fracking operations.
However, the EPA was angered that it had not been informed of the BTEX chemicals in the samples when data was revealed to it on January 15, even though the company knew of their presence.
In a media release published late on Tuesday, Mark Gifford, the EPA's chief environment regulator, said his agency was "very concerned at AGL's lack of timeliness and transparency in informing us of these results and we will be conducting a full investigation".
The company said it had delayed informing the EPA of the discovery of the BTEX chemicals until a full review had been conducted.
“After receiving the water monitoring results, AGL assessed whether the BTEX concentrations could harm the environment or affect human health, and concluded that no such harm arose," a spokeswoman said.
"AGL then sought expert advice which confirmed its assessment that the BTEX concentrations found did not harm the environment or affect human health.
“AGL then proceeded to verify the water sampling procedures including any potential contamination of the samples, review historical data, conduct site inspections, check water monitoring points and also ensure the integrity of our flow back water management system.
“Following these review processes, in the interests of acting prudently and because of the community’s concern about BTEX, AGL then determined a full review of the sampling results was needed and voluntarily suspended operations.
"The relevant authorities - EPA, Office of Coal Seam Gas and the NSW Office of Water - were informed shortly after that decision was made."
The spokesman for Mr Roberts said the investigation would be "a priority" for the department. The company, though, would be able to continue work to ensure the safety of the well during the suspension of its licence.
"It is appropriate that operations at the Waukivory Pilot Project site remain suspended while all the facts are gathered by DRE investigators," Mr Roberts said.
"BTEX has previously been identified in baseline groundwater tests carried out before the commencement of the Waukivory Pilot Project.
"The use of BTEX chemicals was banned by the Liberals and Nationals government for use during coal seam gas fracture stimulation in 2011.
"The investigation will determine exactly what has happened and why traces of BTEX chemicals have been identified in the produced water from the Waukivory Pilot Project."
This article first appeared on the Sydney Morning Herald