1. A method of operating a computer system to simulate the fluid and structural behavior of a volume of the earth near a wellbore, comprising the steps of: retrieving, from a memory resource in the computer system, parameters defining properties of at least one fluid phase at each of a plurality of mesh nodes in a grid representative of a sub-surface formation in the volume to be simulated; retrieving, from a memory resource in the computer system, parameters defining properties for each of a plurality of particles of a frangible material within the volume; selecting initial pressure conditions at each of the plurality of mesh nodes; then, at each of a plurality of time steps over a simulation time period, solving a system of equations comprising a state equation for fluid flow at each of the plurality of mesh nodes and a state equation for particle behavior for each of the plurality of particles; and processing the results of the solving steps to estimate fluid flow and changes in the sub-surface structure over the simulation time period.