1. A method for updating an ensemble of reservoir models to reflect the most current measured production data and to accurately predict reservoir performance, the method comprising: (a) generating an ensemble of reservoir models, the ensemble being represented, at a first time step, by an initial state vector of static and dynamic state variables; (b) from the first time step to a second time step, forecasting forward the initial state vector to compute a forecasted state vector which includes forecast static and dynamic variables and forecast production data; (c) computing a gain based upon the updated static and dynamic state variables; (d) computing an updated state vector utilizing the computed gain of step (c), as well as observed production data and the forecast production data; (e) creating a conforming state vector including the updated static state variables of step (d) and the dynamic state variables of step (b); and (f) from the first time step to the second time step, forecasting forward the conforming state vector to compute a forecasted conforming state vector which includes forecast static and dynamic state variables; whereby the ensemble of reservoir models is updated with the static and dynamic state variables of the forecasted conforming state vector being in conformance with one another.