The NSW Government has cleared AGL of using banned chemicals in any of its fracture stimulation fluid or drilling process at the Waukivory CSG project.
AGL suspended fracking at the Waukivory project on January 28 after detecting BTEX chemicals in four pilot wells and a water storage tank.
BTEX refer to benzene, toluene, ethylbenzene and xylene which can have harmful effects on the central nervous system.
These chemicals can occur naturally in coal seams. The Government prohibits the use of BTEX chemicals in hydraulic fracturing.
Testing of AGL’s site has since been conducted by both the Environment Protection Authority and the Department of Resources and Energy.
The Department of Resources and Energy said the evidence it gathered during the investigation found the source of BTEX in the flowback water is from naturally occurring groundwater within the deep coal seams which are in excess of 600 metres below the surface.
“There is widespread independent literature confirming that BTEX can occur in groundwater found in deep coal seams with similar geological formations,” the Department said.
“There is no evidence of BTEX being detected in aquifers close to the surface.”
The Department said its findings were sent to the University of Queensland for independent review by specialist researchers who reached the same conclusion.
Meanwhile the EPA also cleared AGL of any wrongdoing.
“The EPA has found no evidence that AGL added BTEX to fracture stimulation fluids and found that the BTEX detected was likely to be naturally occurring,” EPA Chief Environmental Regulator Mark Gifford said.
Gifford said the EPA reflects on all of its investigatory outcomes and looks for opportunities to improve how we regulate.
“From this investigation the EPA has determined there is room to strengthen AGL’s environment protection licence conditions and new conditions regarding the monitoring and reporting of BTEX chemicals are being added as a result,” he said.
“Additionally, the future management of flowback water will need to consider the presence of BTEX chemicals to ensure appropriate handling and disposal at a licensed waste facility.”
Acting head of AGL’s upstream gas division, Scott Thomas, welcomed the results of both the investigations.
"AGL will now determine appropriate next steps to resume the Pilot," Thomas said.
"However, it is very encouraging that we can move on with the project which has the potential to provide a reliable source of gas to more than one million users in NSW."
In February AGL announced a comprehensive review of the company’s upstream gas business.
AGL’s CEO Andy Vesey said the review will encompass the management structure and the operational and management practices required to safely explore for and produce gas resources.