Geologists often generate highly heterogeneous descriptions of reservoirs, containing complex structures which are likely to give rise to very tortuous flow paths. However, these models contain too many grid cells for multiphase flow simulation, and the number of cells must be reduced by upscaling for reservoir simulation. Conventional upscaling methods often have difficulty in the representation of tortuous flow paths, mainly because of the inappropriate assumptions concerning the boundary conditions. An accurate and practical upscaling method is therefore required to preserve the flow features caused by highly heterogeneous fine scale geological description. In this paper, the problems encountered in routinely used upscaling approaches are outlined, and a more accurate and practical way of performing upscaling is proposed. The new upscaling method, Well Drive Upscaling (WDU), employs the wells and the actual reservoir boundary conditions (e.g., faults and physical boundaries of the geological model). The main advantage of this method is that the dominant flow paths can be preserved, and thus the geological knowledge can be assimilated appropriately. The new method has firstly been applied to a synthetic model with a tortuous channel, and is shown to have significant improvement over the traditional approach. The sensitivity study on the scale-up factor using a benchmark model shows the advantage of the method with various scale-up factors. The method was then applied to a model of a field in the central North Sea, which involves three-phase flow. In the cases studied, the WDU method produced a comparable result to the dynamic Pore Volume Weighted approach, which involves running the fine grid simulation and computing appropriate relative permeabilities and interblock transmissibilities. The new method makes the upscaling process practical, and our tests show it to be more accurate than traditional methods. Copyright © 2008 Society of Petroleum Engineers.