A majority of heavy oil reservoirs in Saskatchewan are thin and shaly, and are not suitable for thermal recovery methods. for these reservoirs, enhanced oil recovery by an immiscible gas process could potentially recover an additional 200 million m(3) of oil. This paper presents the results of a laboratory investigation, including pressure-volume-temperature studies and two-dimensional physical model experiments, for evaluating the flue gas injection process for heavy oil recovery. The study examined the effects on viscosity reduction and oil swelling of the presence of O-2 and of CO2 content in the flue gas. Physical model tests were carried out to investigate the effects on oil recovery of injection rate, injection mode (vertically downward, vertically upward, and horizontal injection), and slug size. The free-gas mechanism in the flue gas injection process was also studied.