Synthetic gas producer Cougar Energy Ltd expressed optimism that the Queensland government would decide on its favour in January and would allow the resumption of its underground coal gasification (UCG) operations in Kingaroy.

Informing the Australian Securities Exchange (ASX) on Monday, Cougar Energy said that it has already forwarded its sixth and final environmental report to the authorities, stating at the same time that it is hopeful that its coal seam gas activities in the state would be permitted to recommence.

This despite the negative decision issued by Queensland's Department of Environment and Resource Management (DERM) on Cougar Energy's fifth submission, which effectively turned down the gas company's bid for reactivation.

Cougar Energy's Kingaroy project was put on hold in July following the discovery of water contaminants on the company's development site's underground water deposit.

Succeeding tests conducted by independent and government investigators also revealed that Cougar's adjacent property yielded toxic chemicals such as benzene and toluene, which are both cancer-causing elements.

Almost five months after the incidents, Cougar Energy told the ASX that it has so far complied with all government and environmental requirements immediately following the water contamination scare.

Parts of such compliance are the installation of additional monitoring wells and provisions of more data that would aid its application for the Kingaroy's re-opening.

Its sixth report, according to Cougar Energy, embodies the company's extensive testing and work since the Kingaroy plant was ordered to shut down and so far new results are pointing to suggestions that no chemical contaminants were identified or detected on new monitoring bores closely located to the UCG pilot plant.

The company said that DERM is set to decide on its report by January 12 next year but it added that the regulating body could ask for more submissions or actions from Cougar Energy prior to its official advisory of either allowing the Kingaroy plant's re-opening or ordering its eventual demise.

Cougar Energy, however, is looking forward for a favourable outcome as it stressed that "it continues to co-operate and work with the Queensland government and DERM to enable the re-commencement of the Kingaroy trial project at the earliest possible time."

Yet the company needs to convince Climate Change Minister Kate Jones that all its environmental issues have been resolved as she earlier declared that Cougar Energy would not be able to restart its Kingaroy operations unless all government concerns on the troubled UCG site were appropriately dealt with.