The choice of fluid-circulation conditions is of great importance in microhole drilling (MHD) conducted with coiled tubing (CT) as the drill string because of the long length and small bending radius of the tubing coiled on the reel, which result in high circulation friction pressure loss (CFPL). A model for calculating CFPL in flexible CT has been constructed by combining a power-law fluid flow equation and the Dean Number. The calculations have revealed patterns of change in the CFPL during MHD. The CFPL in CT, whether reeled or in downhole, increases steeply with an increase of drilling fluid flow rate, decreases slowly with increasing CT inner diameter, and rises linearly with an increase in CT length. The total CFPL over the entire CT decreases slowly with decreasing CT length when the CT is run downhole from the reel. Deep MHD is suitable only for low drilling-fluid flow rates when the inner diameter of CT is large. Suitable ranges of drilling-fluid flow rate and CT inner diameter have been determined for various drilling depths. The research will provide a basis for selecting CT and drilling-fluid circulation parameters for MHD.