Simulation of hydraulically fractured horizontal wells is discussed in detail. Horizontal wells intercepted by both transverse and longitudinal fractures are evaluated. It is shown that fractured horizontal well representation in simulation models is dependant on the study objectives. For single well studies of the early pressure transient behaviour it is in general necessary both to explicitly model the fracture with small highly conductive grid cells, and to specify relatively small grid cells in the near fracture area. The effect of both grid cell size and fracture conductivity on the transient pressure behaviour and computer time is demonstrated by several examples. Based on these examples it is possible to construct a grid system which satisfies the accuracy required. For reservoir management purposes, reasonable accurate results may be obtained utilising the equivalent effective wellbore radius concept or the transmissibility corrected method presented in this paper. The effective wellbore radius concept is a simple way to model fractured horizontal well behaviour in a full field model. The fractured horizontal well is modelled as a standard vertical well with an equivalent effective wellbore radius. The effective wellbore radius can be derived from analytical solutions. This method is applicable only if the effective wellbore radius is smaller than the pressure equivalent radius of the grid cells. Generally this restriction requires that the horizontal wellbore with its hydraulic fractures are completely located within a single areal grid cell. A more flexible method is to compute both corrected transmissibilities and well connection factors for a coarse grid which gives the same long term pressure behaviour as a fine grid model. This procedure to adjust coarse grid model transmissibilities and well connection factors based on fine grid simulation results is also simple. In general, it is however required to have a simulation model where it is easy to include local grid refinement and which automatically computes adjusted transmissibilities and well connection factors that can then be applied for coarse grid simulations. The main part of this paper is devoted to single phase problems. However, it is demonstrated that the equivalent wellbore radius concept can be applicable also for multiphase problems.