Kingaroy residents are demanding the shutdown of an experimental coal-seam gas plant in Queensland for allegedly contaminating underground water supplies.

Trace amounts of carcinogenic chemicals benzene and toluene were apparently found in the underground water supplies close to the project site.

The findings immediately prompted the Environment Department to warn rural property owners within a 2 kilometre radius of the UCG plant not to use water from their bores for human consumption or stock watering.

Kingaroy Concerned Residents Group chair Gary Tessmann has written to Queensland Premier Anna Bligh asking her to close down the Cougar Energy plant so no further pollution will occur.

The plant works by burning underground coal to convert it to gas.