Researchers at Southern Cross University studied the Queensland's Tara gas field, which is owned by Britain's' BG Group.
The researchers said methane, carbon dioxide and other gases appear to be leaking through the soil and bubbling up through rivers, The Sydney Morning Herald reports.
"'The concentrations here are higher than any measured in gas fields anywhere else that I can think of, including in Russia,'' Damien Maher, a biochemist who helped conduct the tests, was quoted as saying by the Herald. ''The extent of these enriched concentrations is significant.''
Methane measured up to 6.89 parts per million in the gas field, compared with an average background level outside the gas field of about 2 parts per million, the researchers say. Carbon dioxide levels inside the gas field measured up to 541 parts per million, compared with 423 parts per million outside.
Australia is sourcing close to 20 percent of its domestic natural gas from coal seam gas and up to 90 percent in Queensland, says the government's energy white paper released last week.
But Australian farmers and environmentalists have been opposed to coal seam gas.
The white paper forecast a massive expansion of coal seam gas drilling and called for environmental objections to be removed to make large-scale gas extraction easier.
Australia's coal seam gas reserves are among the largest in the world, with a potential extractable amount of 39,905 petajoules, or the equivalent of 6.86 billion barrels of oil, says the Bureau of Resources and Energy Economics.
Maher said there could be considerable carbon-tax repercussions for the coal seam gas sector if methane is found to be leaking in large quantities from soil in gas fields.
Under Australia's carbon tax plan, which went into effect in July, businesses that emit 25,000 tons of carbon dioxide or the equivalent in other greenhouse gases must pay $24 per ton.
Industry peak body the Australian Production Petroleum and Exploration Association, which represents the coal seam gas sector, said the Southern Cross University study is premature.
"We always welcome new research that looks at the industry from new angles and gives us new insight," association spokesman Rick Wilkinson told the Australian Broadcasting Corp.
"But at this stage it's very early days, it's quite preliminary, and we're yet to see where this all leads. The first step is to figure out where is that methane coming from."
2014: The Year in Music [PHOTOS]