This research consists of the parallel development of a new chemical flooding simulator and the application of our existing UTCHEM simulation code to model surfactant flooding. The new code is based upon a completely new numerical method that combines for the first time higher order finite-difference methods, flux limiters, and implicit algorithms. Results indicate that this approach has significant advantages in some problems and will likely enable us to simulate much larger and more realistic chemical floods once it is fully developed. Additional improvements have also been made to the UTCHEM code, and it has been applied to the study of stochastic reservoirs with and without horizontal wells to evaluate methods to reduce the cost and risk of surfactant flooding. During the second year of this contract, we have already made significant progress on both of these tasks and are ahead of schedule on both of them.