Yesterday the two entities signed a licensing agreement to further develop and commercialise the drill, initially for Australia and New Zealand.

The new technology is undergoing further trials at BHPB mine near Wollongong, New South Wales, this week. The TRD technology has been tested over a number of years at Moura and Grasstree mines in Queensland.

The drill is being developed to tap natural gas reserves in unmineable coal beds, to drain gas from mineable coal seams and to help combat global warming by enabling CO2 to be injected into unmineable coal seams.

The TRD consists of a 65mm high-pressure water-powered drilling bit that rotates like a fierce garden sprinkler, connected to a 25mm high-pressure hose. This bores through the coal, driven forward by jets, and carrying an on-board navigation package, so the driller can steer it from the surface.

The drill is connected to a flexible hose instead of a steel drill-pipe so it can swivel sideways and drill at 90 degrees to the line of the main well, needing very little space.

Using water energy instead of a steel bit, it also drills a more permeable hole, enabling more gas to be extracted than from normal drilling. CRCMining chief Mike Hood said by using TRD it allowed methane gas to be effectively harvested from an area 400 metres in diameter.

The drill whipstock passes down a narrow vertical shaft till it reaches the target coal seam. The water-powered drilling head then emerges from the whipstock at right angles to the vertical well and begins to bore a series of holes into the seam, which allows the methane to drain out.

Hood speculated by drilling what is known as a five spot – a series of wells distributed like the spots on the 5-side of a dice and by pumping CO2 down the four outer holes, the residual gas will be driven up the centre well.

“There has been strong interest in the technology from both the US and China, and I think it will really take off in a very big way overseas once the trials are complete,” he said.