A COAL seam gas mine in New South Wales is allowed to resume operations after banned chemicals found in water samples were deemed to be "naturally occurring".
Mining company AGL admitted finding traces of dangerous chemicals benzene, toluene, ethylbenzene and xylene (BTEX) at its Gloucester mine in January.
They had waited 12 days before notifying authorities the cancer-causing substances had been discovered in four pilot wells and a water storage tank.
Operations were then brought to a halt, but the Environmental Protection Agency says there was no evidence of environmental harm or pollution.
"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.
"It is likely that the fracturing process has led to naturally occurring BTEX being detected in flow-back water at levels above background levels.
"However, the EPA also found that it is unlikely that BTEX travelled outside of the fractured part of the coal seam."
Mr Gifford said AGL had not breached its environmental protection licence, which would be "strengthened" to ensure any discovery of the chemicals would have to be immediately reported.
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