This report summarizes research progress made during the period October 1, 1988--September 30, 1989. We report advances in the following general areas: (1) chemical-steam simulation model, (2) vapor-liquid flow in porous media, (3) foam flow in porous media, (4) caustic flooding at elevated temperatures, and (5) reservoir heterogeneity. Additional efforts have been devoted in the last quarter of the past year in upgrading and debugging the simulator. New features were added in three-phase relative permeabilities, the vertical equilibrium and the phase behavior subroutines. 123 refs., 79 figs., 2 tabs.