Geostatistics techniques are being used increasingly to model reservoi
r heterogeneity at a wide range of scales. A variety of techniques is
now available with differing underlying assumptions, complexity, and a
pplications. This paper introduces a novel method of geostatistics to
model dynamic gas-oil contacts and shales in the Prudhoe Bay reservoir
. The method integrates reservoir description and surveillance data wi
thin the same geostatistical framework. Surveillance logs and shale da
ta are transformed to indicator variables. These variables are used to
evaluate vertical and horizontal spatial correlation and cross-correl
ation of gas and shale at different times and to develop variogram mod
els. Conditional simulation techniques are used to generate multiple t
hree-dimensional (3D) descriptions of gas and shales that provide a me
asure of uncertainty. These techniques capture the complex 3D distribu
tion of gas-oil contacts through time. We compare results of the geost
atistical method with conventional techniques as well as with infill w
ells drilled after the study. Predicted gas-oil contacts and shale dis
tributions are in close agreement with gas-oil contacts observed at in
fill wells.