A group of residents wants a South Burnett mining project...

A group of residents wants a South Burnett mining project stopped because of environmental concerns.

Cougar Energy has started work on production plant that will burn coal underground near Kingaroy.

The company plans to build a 400 megawatt power station if its trial is successful.

But residents near the site say they have not been consulted and the company has not completed an environmental impact statement (EIS) on the project.

Spokesman Damian O'Sullivan says they are worried about how the UCG plant will affect water and air quality.

"One of the things is that there's quite a lot of people getting water supplies from less than 600 metres away from this project and this certainly hasn't been considered in the environmental authority that the EPA [Environmental Protection Agency] have done," he said.

"So potentially there's a huge number, hundreds of people who could be affected if their water supplies aren't available."

Cougar Energy's John Henderson says the company is not required to complete an EIS for a trial project.

"We are operating under an environmental authority which has something like 130 very strict conditions and these conditions cover air quality, water quality, noise vibration, there's a number of criteria we have to comply with," he said.