The NSW Environment Protection Authority (EPA) has been criticised for missing a key factor in tests for dangerous chemicals around CSG sites.

Gas company AGL has says its testing has shown elevated levels of a fracking chemical during test drilling at its Waukivory CSG site near Gloucester.

But locals are angry at revelations that the EPA has allowed AGL not to test for one of the most toxic CSG chemicals, known as Tolcide.

The EPA reportedly claims that there is no approved testing method for Tolcide, and so AGL can avoid its obligation to check.

A spokesperson for community group Groundswell Gloucester says the EPA is asleep at the wheel.

“They’ve made it a condition that they test for Tolcide and yet allowed AGL to go ahead and frack without testing,” spokesperson John Watts told the ABC.

“It makes a mockery of the claims by both the New South Wales Government and AGL that we have decent regime in place for controlling the coal seam gas industry.

“It's just another example of sloppy procedures and a push by AGL and the government to go ahead with this project irrespective of the outcomes,” he said.

AGL says the EPA has now set out a testing methodology for Tolcide, which will be conducted on samples taken late last year.

Mr Watts said it is not good enough.

“What's the point of testing now two months after taking the samples?” he asked.

“They continued fracking before they had the results of the testing, if there was a problem it should have been dealt with immediately, and that's the whole point of having a testing regime in place.

“Whether you can still test for that chemical two months down the track is another question that needs to be answered.

“Does it break down, we don't know, it's just an impossible situation and part of the farce that continues in Gloucester.”

Chief environmental regulator at the EPA Mark Gifford said: “It's really a technical discussion and residents shouldn't be concerned.”

“The levels and amounts of these substances we're talking about are very small, there is no risk to people or the environment from the results we've seen to date.

“We are examining these results because we have seen there are some trace elements detected, they are very small, we're talking parts per billion of these chemicals.

“What this does is demonstrate I think is the robustness of the monitoring program that AGL are required to comply with under their Environment Protection licence.”

AGL is expected to make the lab results publicly available within two weeks of receiving them.