A two-fluid model is used to derive a set of boundary conditions. The conditions are produced numerically, and try to imitate the behavior of output injection by using a linearized version of the model. In order to ensure that the model is hyperbolic, virtual mass terms are included in the momentum equations. An observer is presented, using OLGA, a fluid simulator, as its model. The boundary conditions derived are employed in the observer, and its convergence properties are shown to improve. A set of adaption laws for estimating parameters in a two-phase leak model is derived. Estimation of the leakage mass fraction is sacrifced in order to increase performance and stability. A model, also based on OLGA, is used to simulate a leak, and the observer prove to give good estimates of leak parameters as long as estimates of leakage mass fraction is available. Mass flow fraction seem to be a sufficient estimate. A wide range of scenarios are simulated, inspecting the weaknesses of the observer
