Current simulation technology for naturally fractured reservoirs is based on either the continuum or the discrete-fracture approach. The more commonly used continuum model can simulate complex recovery mechanisms. However, it uses a very simplified representation of the fracture system for calculating effective fracture permeability. The discrete-fracture flow method can handle complex fracture geometry. However, its use has been typically limited to basic flow calculations through a connected fracture system embedded in zero-matrix-permeability rock. We have developed a new technique for estimating the effective permeability of gridblocks used in conventional simulators. The idea behind this technique is to integrate the realism of fracture systems, as captured by discrete-fracture models, with the complexity of the now calculations offered by continuum models. The end product of developing this technique is an efficient numerical code based on the boundary-element method. This code permits the fracture system to be complex and poorly connected, and it also includes the contribution from flow through the matrix rock. For fluid flow in the matrix rock, the fractures are treated as planar-source distributions. Periodic boundary conditions, for the flow properties, are used for the calculation of the effective permeability of individual gridblocks. We first use a simple fracture system to demonstrate the validity of our method and to evaluate the sensitivity of the results to matrix and fracture properties. We then use fracture statistics data from the Mesaverde sandstone, effective permeability Values from our code, and a continuum simulator to calculate tracer-flow patterns for a more realistic system.