Arrow Energy, a venture between Shell and PetroChina, said yesterday it had detected traces of the cancer-causing agent benzene in samples taken from its Moranbah coal seam gas project in the Bowen Basin in central Queensland, The Australian Financial Review reports.

Arrow's announcement follows a similar revelation by Origin Energy in October. Origin halted exploration drilling at one of its projects near Miles, 300 kilometres west of Brisbane, after cancer-causing agents known as BTEX were detected in ­surface water during routine testing.

Arrow has advised the government and landholders that monitoring tests detected minute traces of benzene in three of 60 fluid samples taken in the northern Bowen Basin.