A system for blasting lateral holes in the formation around a well bore, the well bore containing production casing and production tubing inside the producting casing. The system includes: a coiled tubing system including a first pump for pumping under pressure cutting fluid; coiled tubing for inserting into the production tubing; a flexible hose having a first end attached to the bottom end of the coiled tubing; a jetting nozzle attached to a second end of the flexible hose; and a deflection shoe adapted for attaching to the bottom of the production tubing. The system further comprises a centering system for centering the coiled tubing within the production tubing; a fluid transport system comprising a second pump and tubing adapted for pumping circulating fluid through the production casing; and a flow-back system comprising tubing adapted for receiving spent cutting fluid out of the production casing.