In this paper, we propose a multiscale technique for the simulation of porous media flows in a flow-based coordinate system. A flow-based coordinate system allows us to simplify the scale interaction and derive the upscaled equations for purely hyperbolic transport equations. We discuss the applications of the method to two-phase flows in heterogeneous porous media. For two-phase flow simulations, the use of a flow-based coordinate system requires limited global information, such as the solution of single-phase flow. Numerical results show that one can achieve accurate upscaling results using a flow-based coordinate system.