The potential of energy extracted from hot dry rock (HDR) was investigated as a commercially feasible alternate energy source. Run segments 3 and 4 were completed in the prototype reservoir of the Phase I energy-extraction system at Fenton Hill, New Mexico. Results of these tests yielded significant data on the existing system and this information will be applicable to future HDR systems. Plans and operations initiating a Phase II system are underway at the Fenton Hill site. This system, a deeper, hotter commercial-size reservoir, is intended to demonstrate the longevity and economics of an HDR system. Major activity occurred in evaluation of the national resource potential and in characterizing possible future HDR geothermal sites. Work has begun in the institutional and industrial support area to assess the economics and promote commercial interest in HDR systems as an alternate energy source