Cougar Energy Ltd said on Wednesday that the decision to shut down its Kingaroy underground coal gasification (UCG) plant was based by the Queensland government on a report fraught with "a number of factual inaccuracies."

The move recommended by the Queensland Department of Environment and Resource Management (DERM), according to Cougar, overlooked its own probe and research on the matter and at this time, the company is not ruling out its legal options to resolve the issue.

The Queensland government ordered the decommissioning of the Cougar project last week following the chemical contamination scare that had hit the facility's water bore in July. The state government also instructed the company to keep the plant under care and maintenance and gave it a month to appeal the decision.

In a report by Business Day, Cougar managing director Len Walker said that he would reveal the report inaccuracies cited by his company next week.

Walker added that Cougar will sustain its efforts of further developing the UCG technology that produces gas from coal seams and can be utilised in generating electricity.

He also lamented that the Queensland government ignored all 10 documents that they submitted to support the safety and viability of the Kingaroy UCG project and as it turned out, the state government's decision made "very little reference to any of the work that we have done."

Aside from its UCG undertakings in Australia, Cougar said that similar projects are currently underway in China, which could eventually surpass Australia's advantage in developing UCG technology, in light of the latest decision by the Queensland government.

Walker pointed to ongoing global efforts to explore the benefits of the UCG technology yet back in Australia, "the Queensland government has taken the foot off the accelerator and put it firmly on the brakes."