Montserrat officials say they are encouraged by the geothermal flow at the first well that became active last month.
The United Kingdom's Department for International Development (DFID) is funding the exploratory phase of the geothermal energy project and Premier Reuben Meade says he is hoping London will fund the entire project so that the resources and revenue can go to the people of Montserrat rather than to private firms.
The DFID has already allocated £8.5 million for the exploration of geothermal energy on the island.
The government said the drilling and testing phases are expected to take three to four months.
It said two wells will be drilled down to a depth of 5,000 feet and that a recent Geothermal Exploration Report, done by EGS of California, indicated that there was an 80 per cent likelihood of geothermal energy on Montserrat.
Director of Public Works Ron Beardsley said the MON-01 well began flowing to the surface last Wednesday.
"It continued to flow overnight and everything is looking very positive. The intention is to let it continue to flow for a few days to monitor temperature and pressure," said Beardsley.
"It is still too early to confidently say that we have a commercially viable well. However, the signs are very encouraging."
Beardsley said the next step would be to carry out specialist long-term testing.
"This will be carried out over several weeks and will determine the chemical composition of the geothermal fluids, as well as the temperature and pressure from the resource. This critical data will inform the design of the most cost-effective generation plant for our location. It will also give an estimate of the long term capacity of the resource. The long-term testing will be carried out over the next couple of months."
Beardsley said the well will be cleaned out and lined down to its current depth of 2,347 metres, and the intention is to carry on drilling a little deeper to provide further geological data.