The boss of a Queensland energy company says there is no immediate future for underground coal gas extraction in the state, after Cougar Energy was fined for contaminating groundwater.

Cougar Energy has been charged $75,000 for allowing a cancer-causing chemical to pervade groundwater near its Kingaroy UCG plant in 2010.

The site has been shut down and the scorned company has gone back to doing what it did before; open-cut coal mining in the Surat Basin.

John Dalton from the Kingaroy Concerned Citizens Group says the fine shows positive thinking within the government and court systems.

“It's good to see the judge was able to see clearly that not only did they contaminate but they failed to report,” Mr Dalton said

“It's also good that the government followed through... at least there's a prosecution now which brings a bit of finality.”

Cougar Chairman Andrew Matheson says industry regulation has improved since the trial, but he cannot see how it will continue for now.

“If the industry can demonstrate it can work with current expectations and requirements both environmentally and commercially and with respect to communities... I'm sure there's a future but in the immediate timeframe however it's pretty difficult to see how there's a large future for UCG in Queensland.”

“I wouldn't expect to see an agreed approach to this within the next few months.”

The Queensland Government seems to be tightening some of its regulations, with the office of Environment Minister Andrew Powell reviewing changes to the regulatory code for mining companies found in breach of environmental laws.

“We do need to check that the penalties and sentences for non-compliance for environmental activities are commensurate with what the community expects,” Powell says.

“I think it is a piece of work that needs to be done regularly.”