PetroChina Co. (PTR) and Royal Dutch Shell PLC (RDSB)-owned Arrow Energy has confirmed the existence of petroleum-related toxins in water samples around its Moranbah Gas Project, a coal seam gas development project in Queensland's Bowen Basin.

In a statement, the company said that secondary testing after initial tests last week had re-confirmed the existence of trace amounts of the BTEX group of chemicals in three wells in the northern Bowen Basin, two of which are within the Moranbah project.

The toxins--mainly benzene, toluene, ethylbenzene, and xylenes--are a major contaminant of oil and gas sites. Local farmers have objected to development of coal seam gas in Queensland and New South Wales states due to concerns about by-products contaminating groundwater.

Arrow said the BTEX chemicals were in trace amounts, between one and three parts per billion, and that it hadn't introduced them to the groundwater through its drilling activities.

"Arrow has not used chemicals containing benzene (or any other members of the BTEX group of chemicals) in its fraccing fluids. More detailed testing is already underway to identify if the chemical is naturally occurring or introduced by another means," Arrow said in a statement.

Fraccing fluids are used in unconventional gas projects to release natural gas that would otherwise be trapped inside underground rocks.

Arrow added that it had advised Queensland's Department of Environment & Resource Management that "due to the very low levels detected and the isolation of the wells, any risk to public health is unlikely".

Water from the wells was put into special treatment or removal ponds and there are no registered bores within at least 5 kilometers of the wells, Arrow said.

AGL Energy Ltd. (AGK.AU) is a joint venture partner in the Moranbah project.

 
   -By David Fickling, Dow Jones Newswires; +61 2 8272 4689; david.fickling@dowjones.com
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