This paper describes a new upscaling algorithm, which combines the key aspe
cts of nonuniform coarsening methods and renormalization based multiphase m
ethods. The algorithm is applied to a range of heterogeneous, two dimension
al geological descriptions. Extensive simulation results indicate that the
new algorithm is able to provide results on highly coarsened grids (5 x 5)
that are in close agreement with fine grid (100 x 100) simulations, at leas
t for the set of problems considered. This very large degree of coarsening
is more than an order of magnitude greater than could be achieved with eith
er of the original methods individually, as currently implemented. For the
set of problems considered, the algorithm is unbiased and consistent, even
at very large levels of scale up.