BHP Billiton Illawarra Coal is seeking ways to significantly increase gas capture rates from in seam drilling programs in its underground coal mining operations. Hydraulic Fracture Technology (HFT), a joint venture between SCT Operations Pty Ltd and CSIRO Petroleum, is working with Illawarra Coal to develop the capability to enhance gas drainage rates in the Bulli Seam using sand-propped hydraulic fracturing based on HFT’s experience at Dartbrook Mine where gas drainage rates were increased by 5 to 180 times. One of the principal challenges for implementing sand-propped hydraulic fracturing in the Bulli Seam is the high vertical stresses that cause borehole breakout in horizontal holes drilled in coal. Borehole breakout effectively precludes the use of open hole straddle packers which are a convenient tool for placing multiple sand-propped hydraulic fractures in in-seam holes. Results of an initial six week trial undertaken at Douglas Project pit-bottom are described, which is aimed to developing the capability to install, grout and perforate casing so that straddle packers can be used for sand-propped hydraulic fracturing in overstressed boreholes. The primary goals of the pitbottom trial at Douglas were to confirm that horizontal boreholes in Bulli coal at 500 m overburden depth are overstressed and unsuitable for use of open hole straddle packers, and to establish a method for installing, cementing and slotting casing so that straddle packers can be used to place hydraulic fractures. Both these goals were successfully achieved.