The efficiency of carbon utilization and storage within the Pennsylvanian Morrow B sandstone, Farnsworth Unit, Texas, is dependent on three-phase oil, brine, and CO2 flow behavior, as well as spatial distributions of reservoir properties and wettability. We show that end member two-phase flow properties, with binary pairs of oil–brine and oil–CO2, are directly dependent on heterogeneity derived from diagenetic processes, and evolve progressively with exposure to CO2 and changing wettability. Morrow B sandstone lithofacies exhibit a range of diagenetic processes, which produce variations in pore types and structures, quantified at the core plug scale using X-ray micro computed tomography imaging and optical petrography. Permeability and porosity relationships in the reservoir permit the classification of sedimentologic and diagenetic heterogeneity into five distinct hydraulic flow units, with characteristic pore types including: macroporosity with little to no clay filling intergranular pores; microporous authigenic clay-dominated regions in which intergranular porosity is filled with clay; and carbonate–cement dominated regions with little intergranular porosity. Steady-state oil–brine and oil–CO2 co-injection experiments using reservoir-extracted oil and brine show that differences in relative permeability persist between flow unit core plugs with near-constant porosity, attributable to contrasts in and the spatial arrangement of diagenetic pore types. Core plugs “aged” by exposure to reservoir oil over time exhibit wettability closer to suspected in situ reservoir conditions, compared to “cleaned” core plugs. Together with contact angle measurements, these results suggest that reservoir wettability is transient and modified quickly by oil recovery and carbon storage operations. Reservoir simulation results for enhanced oil recovery, using a five-spot pattern and water-alternating-with-gas injection history at Farnsworth, compare models for cumulative oil and water production using both a single relative permeability determined from history matching, and flow unit-dependent relative permeability determined from experiments herein. Both match cumulative oil production of the field to a satisfactory degree but underestimate historical cumulative water production. Differences in modeled versus observed water production are interpreted in terms of evolving wettability, which we argue is due to the increasing presence of fast paths (flow pathways with connected higher permeability) as the reservoir becomes increasingly water-wet. The control of such fast-paths is thus critical for efficient carbon storage and sweep efficiency for CO2-enhanced oil recovery in heterogeneous reservoirs.