Summary Geostatistics techniques are being used increasingly to model reservoir heterogeneity at a wide range of scales. A variety of techniques are now available which differ in their underlying assumptions, complexity and applications. This paper introduces a novel methodology of geostatistics to model dynamic gas-oil contacts and shales in the Prudhoe Bay reservoir. The proposed methodology integrates the reservoir description and surveillance data within the same geostatistical framework. The methodology transforms surveillance logs and shale data to indicator variables. These variables are then utilized to analyze the vertical and horizontal spatial correlation and cross-correlation of gas and shale at different times and to develop variogram models. Conditional simulation methods are used to generate three-dimensional distributions of gas and shales in the reservoir. Both methods provide a measure of uncertainty in the resulting descriptions. These conditional simulation methods capture the complex three-dimensional distribution of gas-oil contacts through time. The results of the geostatistical methodology are compared with conventional techniques as well as with the infill wells drilled after the study. The predicted gas-oil contacts and shale distributions are in close agreement with the gas-oil contacts observed at the infill wells. Introduction Geostatistical techniques provide a framework to integrate and model several sources of reservoir data at different scales. With the recent development of high-speed and large-memory computer workstations, geostatistics has become a powerful tool for detailed reservoir analysis, description and evaluation. These technologies make it possible to integrate geological, geophysical and petrophysical data for building more realistic reservoir models. In the Prudhoe Bay field, reservoir description and monitoring fluids in- place through time are the key elements for field development, reservoir management, and predicting performance for different reservoir mechanisms. The stakes include reduction of gas and water handling costs, selection of completion and recompletion intervals, selection of better infill well locations, development of better reservoir simulation models and reduction of the effort required for fluid mapping. Prudhoe Bay is the largest field in North America. During the 16 years of operations, the field has produced more than 7 billion barrels of oil. The major producing mechanisms in Prudhoe Bay are gravity drainage, waterflood and miscible gas flood. The interactions between these mechanisms, the reservoir architecture and heterogeneities (shales, faults and fractures of different shapes and sizes) result in complex gas and water movement through time. Fig. 1 illustrates the gas movement in a cross-section along the main dip direction in a gravity drainage region of the reservoir. Gas movement is affected significantly by shales of varying sizes which may not be continuous between wells. The gas tends to move underneath the shales resulting in isolated gas tongues or fingers which breakthrough at different times at the wells (gas underruns) and oil regions which are bypassed (oil lenses). For a given well, the cased-hole logs at different times show multiple gas-oil contacts (Fig. 1). Under these conditions, it is difficult to interpret and visualize the inter-well distribution of gas in three-dimensions.