Stress sensitivity and water blocking in fractured carbonate reservoir formations with low permeability were determined as the main potential damage mechanisms during drilling and completion operations in the ancient buried hill Ordovician reservoirs in the Tarim Basin. Geological structure,lithology, porosity, permeability and mineral components all affect the potential for formation damage.The experimental results showed that the permeability loss was 83.8%-98.6% caused by stress sensitivity,and was 27.9%-48.1% caused by water blocking. Based on the experimental results, several main conclusions concing stress sensitivity can be drawn as follows: the lower the core permeability and the smaller the core fracture width, the higher the stress sensitivity. Also, stress sensitivity results in lag effect for both permeability recovery and fracture closure. Aimed at the mechanisms of formation damage, a modified low-damage mixed metal hydroxide (MMH) drilling fluid system was developed,which was mainly composed of low-fluorescence shale control agent, filtration control agent, lowfluorescence lubricant and surfactant. The results of experimental evaluation and field test showed that the newly-developed drilling fluid and engineering techniques provided could dramatically increase the ret permeability (over 85%) of core samples. This drilling fluid had such advantages as good rheological and lubricating properties, high temperature stability, and low filtration rate (API filtration less than 5 ml after aging at 120 ℃ for 4 hours). Therefore, fractured carbonate formations with low permeability could be protected effectively when drilling with the newly-developed drilling fluid.Meanwhile, field test showed that both penetration rate and bore stability were improved and the soaking time of the drilling fluid with formation was sharply shortened, indicating that the modified MMH drilling fluid could meet the requirements of drilling engineering and geology.