> if gas would need to be present, then the code would be quite wrong in it's current incarnation because a water-oil system may very well occur at some times in some sub-domains of three-phase problems.

That's not what I'm saying.  I'm saying that we are currently unable to simulate systems for which Gas is not an *active* phase.  Sg=0 is no problem in the current code, but we cannot simulate Oil/Water systems.  The present code assumes that the derivative of the residuals with respect to "xvar" is non-zero and that's just not true in an Oil/Water system.  There is just no way to run the simulator without assuming that Gas is an active phase (whose saturation may/will vary).