Electrically powered electromagnetic field source beacons installed in a reference well in combination with a down-hole measurement while drilling (MWD) electronic survey instrument near the drill bit in the borehole being drilled permit distance and direction measurements for drilling guidance. Each magnetic field source beacon consists of a coil of wire wound on a steel coupling between two lengths of steel tubing in the reference well, and powered by an electronic package. Control circuitry in the electronic package continuously “listens” for, and recognizes, a “start” signal that is initiated by the driller. After a “start” signal has been received, the beacon is energized for a short time interval during which an electromagnetic field is generated, which is measured by the MWD apparatus. The generated magnetic field may be an AC field, or switching circuitry can periodically reverse the direction of a generated DC electromagnetic field, and the measured vector components of the electromagnetic field are used to determine the relative location coordinates of the drilling bit and the beacon using well-known mathematical methods. The magnetic field source and powering electronic packages may be integral parts of the reference well casing or may be part of a temporary work string installed therein. Generally, numerous beacons will be installed along the length of the reference well, particularly in the important oil field application of drilling steam assisted gravity drainage (SAGD) well pairs.