A method and apparatus for directional drilling to recover hydrocarbons, thermal energy, or the like, by using coiled tubing while the well is under pressure so that high density drilling fluids to control the subsurface pressures during drilling are not required. Snubbing apparatus and methods which maintain control of the bore hole pressure throughout the drilling operation are used, thus permitting the use of fresh water as a combination hydraulic fluid to operate a downhole motor and cool the bit, and to flush cuttings from the bore hole. The apparatus uses a down hole assembly including a bit driven by a motor, preferably hydraulic, which is located in a bent housing. A steering tool capable of indicating the angle and azimuth of inclination of the housing is carried by the motor housing and is connected to surface instrumentation by an electrical cable extending through the coiled tubing. The housing and steering tool are coupled to the coiled tubing string by an orientation device which can rotate the bent housing relative to the tubing string through a selected incremental amount so that the bent housing can be oriented in the appropriate direction to drill along the preselected path.