Three phase oil, gas, and water flow in liquid-rich shale plays is investigated in this paper, using a state-of-the-art technique of dividing shale matrix into different sub-media. Shale reservoirs always present numerous challenges to modeling and understanding, from unintuitive, heterogeneous, and difficult to characterize rock properties, to limited understanding of the governing flow equations, lack of fundamental knowledge on related desorption mechanisms, and nearly impermeable formations with pores on the order of magnitude as the mean free path of gas molecules. This work proposes a partitioning scheme to divide porous media in shale into three different sub-media (porosity systems) with distinctive characteristics: inorganic matter and kerogen (in the shale matrix), along with fracture network (natural or hydraulic). The current model gives us the capability of better analyzing the complex nature of mass transfer in shale. Relative permeabilities in our model are accounted for by employing the functions specifically presented for shale reservoirs. Our model can also handle various flow and storage mechanisms corresponding with shales such as molecule/wall interactions and slippage of the gas phase, multicomponent desorption, and capillarities. Simulation results show that hydrocarbon production from shale reservoirs exhibits complicated dynamics that are controlled by a number of different factors. Because of very high capillary pressure in shale, water is observed to imbibe into the water-wet inorganic matter during the late production period. On the contrary, mass flow in the oil-wet kerogen is mostly limited to two-phase oil and gas flow. Although kerogen is considered to be a rich source of hydrocarbon, relatively high capillary pressure and very low rock permeability hinder oil production in organic-rich shale. We might be able to address such problems by employing an appropriate production enhancement technique compatible with the ultra-tight nature of such reservoirs.