This Quarter has been divided between running experiments and the installation of the drill-pipe rotation system. In addition, valves and piping were relocated, and three viewports were installed. Detailed design work is proceeding on a system to elevate the drill-string section. Design of the first prototype version of a Foam Generator has been finalized, and fabrication is underway. This will be used to determine the relationship between surface roughness and ''slip'' of foams at solid boundaries. Additional cups and rotors are being machined with different surface roughness. Some experiments on cuttings transport with aerated fluids have been conducted at EPET. Theoretical modeling of cuttings transport with aerated fluids is proceeding. The development of theoretical models to predict frictional pressure losses of flowing foam is in progress. The new board design for instrumentation to measure cuttings concentration is now functioning with an acceptable noise level. The ultrasonic sensors are stable up to 190 F. Static tests with sand in an annulus indicate that the system is able to distinguish between different sand concentrations. Viscometer tests with foam, generated by the Dynamic Test Facility (DTF), are continuing.