Reservoir simulation and reservoir management. Differential material balance equations. Relative permeability, capillary pressure and residual saturations in two and three-phase flow. Compositional reservoir simulator equations and the Black Oil Model. Numerical solution of simulator equations. Truncation errors and stability. Transmissibilities, upstream weighing, explicit and implicit and explicit treatment of transmissibilities. Numerical dispersion and grid-orientation effects. Model and grid selection. Model initialisation and capillary pressure-gravity equilibrium. Well models and equivalent radius of a well block, relating well grid-block pressures to pressure test build-up pressures. Use of well dynamic and vertical pseudo-functions. Planning and executing a reservoir simulation study. Reservoir simulation workshop.