Linc Energy will close its Chinchilla underground coal gasification facility after accusing the Queensland government of siding with the rival CSG sector.
Linc said it would cease operations at the gasifier facility this month after two years and $200 million worth of technology development.
The company is set to move its UCG projects to Asia, leaving 30 people working on the project out of work.
Linc chief executive Peter Bond said the decision comes as the Queensland government favours the expansion of the CSG industry, leaving little room to develop the UGC sector.
“Due to the regulatory uncertainty in Queensland over the last several years in particular, I do not believe that the developing UCG industry has been treated reasonably. I do not believe we have been afforded a level playing field or offered a ‘fair go’ with access to the basic right of statutory due process,” Bond said.
"We had been trying to get feedback from the government in the hope that we could work together going forward but that has been slow.
"Coupled with the fact we are moving to Asia and the fact we're getting a huge demand base for our technology in Asia, it's all come together."
UGC involves burning coal while it is still in the seam and capturing the gas.
It often competes for access with the same structures used for CSG extraction.
Linc had been conducting UCG operations on the Chinchilla Research and Development site since late 1999.
Western Downs mayor Ray Brown is disappointed Linc Energy is leaving the area, ABC reported.
"I believe Linc Energy went through the regulation process from day one," he said.
"This was a major demonstration plant at Chinchilla, they have proved that source of fuel.
"So to let this go offshore, I think, is a sad loss for Queensland."
State Environment and Heritage Protection Minister Andrew Powell said the Queensland Government is unapologetic for its stringent environmental standards.
Last Linc announced it was seeking shareholder approval to quit the ASX and move to the Singapore Exchange instead.
Seeking to diversify the company also acquired Rio Tinto’s Blair Athol coal mine, which it hopes to reopen in the next four weeks.