In clastic reservoirs in the Oriente basin, South America, the rock-quality index (RQI) and flow-zone indicator (FZI) have proved to be effective techniques for rock-type classifications. It has long been recognized that excellent permeability/porosity relationships can be obtained once the conventional core data are grouped according to their rock types. Furthermore, it was also observed from this study that the capillary pressure curves, as well as the relative permeability curves, show close relationships with the defined rock types in the basin. These results lead us to believe that if the rock type is defined properly, then a realistic permeability model, a unique set of relative permeability curves, and a consistent J function can be developed for a given rock type. The primary purpose of this paper is to demonstrate the procedure for implementing this technique in our reservoir modeling. First, conventional core data were used to define the rock types for the cored intervals. The wireline log measurements at the cored depths were extracted, normalized, and subsequently analyzed together with the calculated rock types. A mathematical model was then built to predict the rock type in uncored intervals and in uncored wells. This allows the generation of a synthetic rock-type log for all wells with modem log suites. Geostatistical techniques can then be used to populate the rock type throughout a reservoir. After rock type and porosity are populated properly, the permeability can be estimated by use of the unique permeability/porosity relationship for a given rock type. The initial water saturation for a reservoir can be estimated subsequently by use of the corresponding rock-type, porosity, and permeability models as well as the rock-type-based J functions. We observed that a global permeability multiplier became unnecessary in our reservoir-simulation models when the permeability model is constructed with this technique. Consistent initial-water-saturation models (i.e., calculated and log-measured water saturations are in excellent agreement) can be obtained when the proper J function is used for a given rock type. As a result, the uncertainty associated with volumetric calculations is greatly reduced as a more accurate initial-water-saturation model is used. The true dynamic characteristics (i.e., the flow capacity) of the reservoir are captured in the reservoir-simulation model when a more reliable permeability model is used.