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With growing economic and environmental pressures, oil companies seek ways to increase the oil recovery from every well. Re-entry drilling of horizontal sidetracks from existing wells and multilateral drilling for new wells are techniques which help to achieve that increase. However, new approaches are needed to reduce the cost and to improve efficiency of rotary drilling methods used for these purposes. A new nonrotary plasma channel drilling (PCD) method for drilling of small diameter holes (3.5-15 cm) in oilfields for sidetrack creation and multilateral drilling is described in this paper. The method relies upon the use of the energy of impulse spark discharges which are formed inside the rock formation ahead of the drill position. Repeated formation of the plasma channel results in an effective and controlled drilling action. Plasma channel drills developed at Strathclyde University are able to cut clearly defined circular holes in medium hard sandstone with speeds of up to 16 cm/min using specific energies as low as 400 J/cm3. Plasma channel drilling has the potential to increase the lifetime of oil wells and would significantly reduce the cost of exploration drilling and subsurface data acquisition. PCD technology can also be a cost-effective and practical solution for other applications such as mineral mining, water boring and scale removal where micro-hole drilling is essential.