Steam Assisted Gravity Drainage (SAGD) can cause dilatant shear failure in unconsolidated heavy oil reservoirs. Our experimental work documents changes induced by such shear failure in absolute permeability, relative permeability to oil and water, and residual saturations. Tests were performed on 2 inch diameter synthetic specimens made from lower fine to medium grain size Ottawa sand formed with wet vibration to an initial porosity of about 32%. Loading paths included triaxial compression and radial extension. Axial and volumetric strains were measured directly during deformation, and single and two phase permeability tests were executed at axial strains of 1 to 10%. Triaxial compression tests followed a path of increasing mean stress (under constant confining stress) while radial extension tests provided a decreasing mean stress loading path (reducing confining stress under constant axial stress). The relative permeability was determined by the unsteady state method for relative permeability endpoint assessment. Results show similar absolute permeability trends to those published by others, but our multiphase measurements appear unique. Relative permeabilities are more strongly influenced by shearing, with water relative permeabilities being increase by as much as a factor of 2. The effect seems to be slightly greater for finer grain sand than for the medium grain size. Absolute permeability changes were greatest for the samples with the lowest initial porosity, which would include those that were poorer sorted. Poorer sorting of the sand pack seems to reduce the impact on relative permeability changes, however. Residual oil saturations were reduced from 0.28 to 0.13 in the lower fine Ottawa sample, suggesting the possibility for significant improvement in oil recovery when the sand is sheared. During triaxial testing, it was interesting to note that at 50 psi effective confining stress, absolute permeability increased with shearing, but at 200 psi effective confining stress, absolute permeability was reduced, even though the volumetric strain was still dilatant. In addition to providing new data on the magnitude of absolute permeability and multiphase flow properties for unconsolidated sands, this paper also demonstrates that dilatant shear failure does not guarantee increased flow capacity for such rocks.