The 400MW power project will use methane gas recovered using the underground coal gasification process.

Cougar managing director Len Walker said the drilling results have already covered most of the area selected for resource evaluation.

"Despite drilling delays due to heavy rain and the Christmas holiday period we have made excellent progress, and to date the company has completed a total of 1902 metres, including 152 metres of core drilling."

Further drilling will concentrate on acquiring core samples and monitoring groundwater pressures.

Walker said the data from all the work will be used to select a location for the project, with drilling of the first injection and production wells scheduled for late March.