Twenty years after the Exxon Valdez spill, weathered residual oil is still found in small, isolated lenses of subsurface sediments of a very small fraction of Prince William Sound shorelines. The ecological impact of this remaining oil still causes great concern and has been extensively studied for this reason. Despite this concern and numerous publications on the subject, no papers exist in published literature that have applied the fundamental principles and tools of reservoir engineering to understand and explain how oil entered the subsurface, why most but not all of it was washed out by tides and occasional storms, and why and under what conditions some of it still persists. Potential ecological impacts of the remaining oil are determined by polycyclic aromatic hydrocarbon (PAH) components in the now highly degraded oil. The PAH components dissolve in groundwater (i.e. water within sediment pores) and transport to the surface water (water above sediment) where they could impact biota. Aqueous PAH concentrations in nearshore waters are currently at background levels even along shorelines identified with the most subsurface oil. Three-dimensional simulations of two well-characterized sites representative of locations with the most remaining subsurface oil clearly show both why remaining oil persists where it does, and why PAH concentrations in the surface water are extremely low. The permeability of underlying fine-grained sediments containing oiled lenses is about 1000 times less than overlying boulders, cobbles and gravels. Therefore, the water velocity through these lenses is extremely low. Secondly, the PAH solubility in the pore water within these lenses is extremely low. Thirdly, twice daily, large volumes of seawater flowing through higher permeability surface sediments mix with and dilute any dissolved PAH leached from buried source lenses. Detailed modeling results therefore explain why only background levels of PAH have been measured in numerous surveys of water or sentinel biota such as mussels.