Managed Pressure Drilling (MPD) is an alternative to overbalanced and underbalanced drilling in conditions where pore pressures and fracture gradients are so close to each other (depleted reservoirs, deep and ultra-deep offshore reservoirs) that it is not possible to drill significant depths without setting a casing. While MPD enables an operator to drill longer footages without setting a casing, it requires precise estimation of equivalent circulating density (ECD) during drilling and static bottomhole pressure 1 (SBHP) during non-drilling times. General practice in the drilling industry is to use rheological and volumetric properties of drilling fluids measured at surface, to estimate ECD and SBHP. Consequently, ECD and SBHP measured using MWD and LWD tools in the field do not match the theoretical calculations. This study shows the importance of introducing the effect of! downhole conditions to hydraulic equations in order to estimate I ECD's and SBHP's accurately. Paraffin-based synthetic drilling, fluid is used for this purpose. The effect of pressure and temperature on density of fluid is determined using PVT cell experiments. An equation relating the density of the fluid to pressure, and temperature is determined using linear and non-linear regression techniques. Rheological characterization of the fluid was obtained on a Farm 75 HPHT rotational viscometer. A Bingham plastic model was used to define shear stress - shear rate relation of the fluid in all pressures and temperatures. The effect of pressure and temperature on plastic viscosity and yield point are determined using linear and non-linear regression techniques, similar to the ones used in PVT analysis. Both onshore and offshore cases are investigated and the effect of incorporating downhole effects to density and theological parameters on ECD are analyzed