A method for simulating a microemulsion system in a chemical enhanced oil recovery process is disclosed. The method includes receiving a geological model of a subsurface reservoir that defines a grid having a plurality of cells, determining a surfactant concentration for each cell based on a volume of surfactant and a volume of water within the cell and independently from a volume of oil in the cell, and simulating fluids flowing in the subsurface reservoir. Results from simulation can be used to optimize a chemical enhanced oil recovery process in a subsurface reservoir.