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"Mr Dalton said five cows, grazing 1km downwind of the plant, also tested positive for benzene and toluene, six months after the incident.
"They are the only cows known in the state of Queensland to have tested positive for benzene and toluene. Cougar Energy said it could have been thefarmer driving his tractor round and round the cattle."
Trial fears after toxin found at Aussie plant
The halting of an experimental energy trial in Australia has sparked concerns about a similar trial in the Waikato.
An underground coal gasification project in Queensland – which involved setting fire to a coal seam hundreds of metres below ground – was stopped when traces of the cancer-causing chemicals benzene and toluene were discovered in groundwater near the Cougar Energy-owned plant.
State-owned mining company Solid Energy is establishing a $22 million scheme to tap energy from impossible-to-mine coal near Huntly. The pilot was due to get under way in March, but has been delayed until Christmas.
Members of a community group that fought for more than a year to have the Queensland plant shut down say Waikato residents should be worried.
However, Solid Energy says strict monitoring of the project is in place to prevent environmental damage.
"As a community we hated it," Kingaroy Concerned Citizens Group secretary John Dalton said. "If I lived in Waikato I'd be particularly worried. If anything goes wrong it tends to go wrong in a big way.
"UCG has always been a risky technology. It's been around for 100 years but no-one has been able to master it to the extent that is considered safe. It is promoted as clean because the burning is underground.
"But there are simple scientific facts that you can't sidestep. One is that every time you burn coal underground it emits benzene and toluene."
Mr Dalton said the plant had a huge impact on the local farming community.
"The Commonwealth Scientific and Industrial Research Organisation, which is Australia's research body, recommended underground coal gasification doesn't take place in areas that have potable water or really useful aquifers nearby.
"It should never happen near prime agricultural land. We are a very rich agricultural area here, you [Waikato] would be more so. We had organic dairy farmers who lost market share because they were downwind of the site.
"The whole district loses its reputation as green. The land value ... no-one wants to buy land."
He added: "I really feel sorry for you, because it's a really, really stressful time for the community."
Solid Energy's general manager of gas development, Steve Pearce, said lessons had been learnt from the failed Australian plant, as well as abandoned projects at Hoe Creek and Carbon County, in Wyoming.
A plant in South Africa had been operating for four years "with absolutely no issues" and two other schemes were being trialled in Queensland. "The number of problems is actually quite small. We are monitoring what is going on internationally."
Solid Energy would not allow groundwater to escape by maintaining a low pressure in the gasifier, he said. "The aim of all of the design work is to ensure that. That is one of the fundamental aims ... protection of the environment."
And he noted that traces of benzene and toluene were naturally present in the coal seam, which baseline monitoring of the Huntly site had detected.
"I know in our area that if you analyse coal seam water there are hydrocarbons in it. It doesn't surprise me that they would detect one or two parts per billion [in Kingaroy]."
Although he admitted problems in Australia had made him nervous, the company had made every effort to reassure local residents.
"If I wasn't confident we wouldn't be doing this," he said. "Our company certainly wouldn't endorse, or undertake something, where we weren't confident."
But environmentalists want an end to UCG. Greens Senator for Queensland Larissa Waters, who was part of the fight against Kingaroy, said it was necessary to "safeguard rural communities, groundwater and food producing land."
She said that although Cougar Energy had been ordered to decontaminate the underground water, "the tragedy is that some may remain there forever".
New Zealand Green party co-leader Russel Norman said the moratorium on the Kingaroy plant should set alarm bells ringing.
"There are outstanding issues with it. It's such experimental technology and there are real issues around water contamination."
Kingaroy: what went wrong?
The Queensland state government finally shut down Cougar Energy's Kingaroy plant last month and ordered it to be decommissioned.
It was ordered closed in July 2010 when tests found readings of 2 parts per billion of benzene in a nearby groundwater monitoring bore. The acceptable limit is one part per billion.
The local community fought the development of the plant for more than a year.
Kingaroy Concerned Citizens Group secretary John Dalton says "thousands of pages" of reports were produced after the trial "went badly wrong".
Mr Dalton said problems occurred within three days of the plant being fired up. He believes that an influx of water from a nearby aquifer hit "super heated" coal creating "enormous steam pressure".
Casing around the bore rose about a metre out of the ground and "busted the valves and the steel pipes that take the gas over to be treated".
It fell back down but rose a second time, he said. "... the whole furnace was burning without the pipe works being connected to the treatment area."
Contaminated water was then found in a monitoring hole about 250m away from the burning seam.
Mr Dalton said five cows, grazing 1km downwind of the plant, also tested positive for benzene and toluene, six months after the incident.
"They are the only cows known in the state of Queensland to have tested positive for benzene and toluene. Cougar Energy said it could have been the farmer driving his tractor round and round the cattle."
Last month, officials upheld their decision to close the site but Cougar may appeal against the decision.
"The company still say that Kingaroy is their flagship enterprise and they are leaders in this technology. Well, we reckon it's an embarrassment," Mr Dalton said.
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