We modified Black Oil Applied Simulation Tool ( BOAST) Program for gas reservoirs, and successfully applied it to simulate production of gas from low permeability reservoirs. Our modification results in significant decrease in computational time and storage requirements, and allows us to reduce the designated grid blocks to the size of the high permeability zone and even the fracture. Pressure and saturation of gas and water were calculated at different locations in the reservoir during the production. Our calculation showed that the coproduction of gas and water and presence of the high permeability layers or the induced fractures significantly enhance the economical production of gas from low permeability reservoirs.