The Brisbane based company, of which former Foreign Affairs Minister Alexander Downer is chair, said that on the weekend its drilling hit permeable faults and fractures which was encouraging because it was considered they may represent pathways to allow hydrogen to migrate from the source.

“It is encouraging to report that while drilling through the Parara limestone formation, hydrogen was detected at elevated levels (above background levels),” the company said.

“The samples were collected on surface and contained an expected high level of air contamination. Further testing and analysis of these samples were conducted in an offsite laboratory and the air corrected composition and values of hydrogen were found to be analogous with offset data.”

GHY said more down hole samples needed to be taken and tested to confirm the composition of has and its purity in the formation.

However, it said it believed the early detection of hydrogen at the site confirmed the existence of natural hydrogen-bearing formations at the permit area.

“The results are preliminary in nature but they support the company’s ongoing work in discovering Australia’s first natural hydrogen field.”

Hydrogen is easy to produce artificially through either fossil fuels or water but it needs electricity and is expensive. Costs of between $10 and $15 a kilo are common and that has to be reduced to about $2 a kilo to be comparable to gas.

Naturally-occurring hydrogen may be a way of producing a low cost fuel.

The industry is unsure how plentiful hydrogen is because gas exploration has previously never bothered to look for it.

At the Gold Hydrogen site known as Ramsay 1, naturally occurring hydrogen was discovered in samples in 1931 and the latest drilling has been to verify those findings.

The company takes its name for the term used to categorise naturally occurring hydrogen from other forms, such as green, blue and grey hydrogen.