Underbalanced drilling is experiencing growth at a rate that rivals that of horizontal drilling in the mid-1980s. Problems remain, however, for applying underbalanced drilling in a wider range of geological settings and drilling environments. This report addresses the development and testing of two products designed to advance the application of underbalanced drilling techniques. A user-friendly foam fluid hydraulics model (FOAM) was developed for a PC Windows environment. The program predicts pressure and flow characteristics of foam fluids used in underbalanced drilling operations. FOAM is based on the best available mathematical models, and was validated through comparison to existing models, laboratory test well measurements, and field data. This model does not handle air or mist drilling where the foam quality is above 0.97. An incompressible drilling fluid was developed that utilizes lightweight solid additives (hollow glass spheres) to reduce the density of the mud to less than that of water. This fluid is designed for underbalanced drilling situations where compressible lightweight fluids are inadequate. In addition to development of these new products, an analysis was performed to determine the market potential of lightweight fluids, and a forecast of underbalanced drilling in the USA over the next decade was developed. This analysis indicated that up to 12,000 wells per year (i.e., 30 percent of all wells) will be drilled underbalanced in the USA within the next ten years.