Arrow Energy was on Friday granted environmental approval to drill 55 coal seam gas wells at Hopeland, near Chinchilla, about 300km west of Brisbane.
The project to expand the Shell and PetroChina joint venture's existing six-well facility is near the site of Linc Energy's failed underground coal gasification project, which is contaminated with benzene, naphthalene and cyanide.
The Department of Environment and Science says it has placed "strict conditions" on the environmental authority obligating Arrow to monitor any potential movement of contaminants from the Linc site.
The Lock the Gate Alliance condemned the approval saying the government's own scientists had raised concerns about groundwater contamination.
"Any conditions attached to this project are unlikely to mitigate the risk of contaminants spreading in groundwater because once the damage is done, it can't be undone," Lock the Gate coordinator Ellie Smith said in a statement.
"Arrow Energy also has a terrible track record obeying the law in Queensland, and was fined $1 million last year for illegally drilling directional gas wells beneath farmland without access agreements with the landholders.
"The Palaszczuk government has once again demonstrated how eager it is to sacrifice Queensland farmland and the water that sustains it in order to appease multinational coal seam gas companies."
The department has said that under the conditions, Arrow must expand the number of bores in its existing groundwater monitoring network, have a program to detect changes to groundwater, and monitor all groundwater points at identified locations every quarter.
Linc operated four underground coal gasification sites where it burned coal to produce gas between 2007 and 2013, but that caused the ground to fracture allowing toxic gasses to leak into the groundwater.
Linc went into voluntary administration in April 2016 before being slapped with a $4.5 million penalty in 2018 on five counts of wilfully and unlawfully causing environmental harm.
Brisbane District Court found the company guilty in 2018 of causing damage by allowing toxic gas to leak from its underground coal gasification sites.
The department said in November 2022 that more than 180 groundwater samples from Linc Energy sites had tested positive for contaminants including benzene, naphthalene and cyanide.
However, it said, a further 130 samples from nearby landholder bores taken since 2015 showed they had not been contaminated and landholders were notified as recently as late 2021.
Arrow applied for an environmental authority to increase the number of gas wells by 55 and the surface area of its nearby Hopeland project in October 2021.
