Techniques for studying the performance characteristics of heterogeneous reservoirs have been developed. The effect of permeability variation on both the steady-state and the transient flow of a single fluid has been investigated. Limited comparisons with field and laboratory data have been made. The physical models studied consist of random three-dimensional arrays of homogeneous porous blocks. The permeabilities of the individual elements are assigned according to a specific distribution function; uniform anisotropy is introduced by varying the relative dimensions of the blocks. A particular model is perturbed simply by re-arranging its elements at random. The behavior of a physical model is determined by digitally solving its numerical analogue. Based on computational experiments, subject to the restrictions implied by the assumptions that were made, the following general conclusions have been drawn.The most probable behavior of a heterogeneous system approaches that of a homogeneous system with a permeability equal to the geometric mean of the individual permeabilities.The effects of flow geometry and anisotropy on the most probable value of the effective permeability of a heterogeneous medium are finite but not significant.The permeability determined from a pressure build-up curve for a heterogeneous reservoir gives a reasonable value for the effective permeability of the drainage area.A qualitative measure of the degree of heterogeneity and its spatial configuration are obtained from a comparative study of core analysis and pressure build-up data. It has been indicated that these conclusions are predicated on the assumption that the core analysis and the pressure build-up data represent true reservoir characteristics. Common sources of error in these data have been discussed. Introduction: One of the most significant problems of reservoir engineering is that of determining the nature and the disposition of the heterogeneities that inevitably occur in petroliferous formations. It is with this problem that this paper is concerned.