Detailed laboratory studies were conducted to study the effect of hot water and steam injection on the permeability, relative permeability, wettability, residual oil saturation and mineralogie composition and structure of a clay bearing sandstone reservoir in Southern Alberta, Canada. The samples initially contained only kaolinite and illite clays, classically classified as non-water sensitive. This paper presents the results of three detailed laboratory coreflow experiments and documents the degree of formation damage (up to 95% reductions in permeability were observed) due to temperature induced mineralogie and wettability alterations. Multipoint temperature tests from 32 to 265°C (90 to 510°F) were conducted at full reservoir conditions on preserved core material to generate this data. The effect of steamflooding vs merely hot waterflooding at 265°C (510°F) on residual oil saturation is also illustrated indicating up to a 20% additional reduction in residual oil saturation by steamflooding. A complete suite of pre and post test perographie studies on each sample tested including x-ray diffraction, thin section and scanning electron microscope analysis indicate the definitive transformation of inert kaolinite day into water sensitive swelling smectitic day due to reactions between the kaolinite clay and the quartz during the high temperature flooding process. The results of this study have specific application to the design of hot water and steam injection projects in other similar types of sandstone reservoirs.