This report describes the background, objectives, and present status of the project to develop a system to drill horizontal holes in coal from a vertical wellbore with water jets. One possible application of this technology would be methane drainage from coalbeds. Underground coal gasification is another area of coal utilization which involves moving gas through coalbeds. Most methane drainage and UCG schemes involve drilling holes into the coalbed. The holes are generally drilled by conventional rotary drills adapted for that purpose. Several procedures are used: patterns of vertical wells, long slant holes drilled from the surface to intercept the coal seam horizontally; horizontal holes drilled from the bottom of large vertical shafts; and holes drilled from mine working faces. It is clear that a drill system which could be sent down a conventional vertical borehole, turned 90 degrees, and advanced into the coal seam would have direct application in extending the well bore for methane drainage and in wellbore linking in UCG work. Recent progress in water jet cutting technology makes such a drill appear to be feasible. As of this report, work on the water jet drilling project has produced a complete set of drawings and specifications of a system that should meet the project set of drawings and specifications of a system that should meet the project objectives. The major components of the system have been tested in the field or modeled in the lab. The next step is to assemble and field test the components as a system. That operation will confirm or alter the certain conclusions made now about the capabilities and limitations of the water jet drill.