The three-dimensional oil-water flow in horizontal pipe has been investigated by introducing population balance equation (PBE). The water fraction of inlet flow and mixture velocity varies from 46% to 60% and from1.25 m/s to 3m/s, respectively. The multiple size groups model has been applied to the non-uniform drop size distribution in oil-water flow. The drop coalescence models have a clear efficacy on the prediction capability of the PBE. In this work, drop coalescence model for oil-water is modified and used for predicting the phase distribution of dispersed oil - water in horizontal pipe. Population balance with modified Coulaloglou’s frequency model is used. The attention of the modification is on the presence of droplets that reduce the free space for droplet motion and cause an enhancement in the collision frequency. The phase distribution profile from numerical results is presented and discussed. Acceptable agreement with the experimental data is achieved by using the modified coalescence model. Also, at 46% water fraction and mixture velocity equal as 3 m/s, model with population balance with modified Coulaloglou is 4% and 1% better than Luo’s model and Coulaloglou’s model, respectively