This study utilizes synchrotron X-ray micro-tomography and pore scale modeling to investigate the process of gas exsolution and how it affects non-wetting phase relative permeability. Exsolved gas distributions are measured on Domengine and Boise sandstone samples using synchrotron X-ray micro-tomography. Observed gas phase distributions are compared to a new model that simulates the growth and distribution of exsolved gas phase at the pore-scale. Water relative permeability curves are calculated using a Stokes flow simulator with modeled and observed gas distributions, under various conditions, such as rock geometry, and pressure depletion rates. By comparing the actual bubble distributions with modeled distributions, we conclude that exsolved gas is more likely to form and accumulate at locations with higher water velocities. This suggests that convective delivery of CO2 to the gas bubble is a primary mechanism for bubble growth, as compared to diffusive transport through the aqueous phase. For carbonated brine flowing up a fault at half a meter per day, with 5% exsolved gas, the water relative permeability is estimated to be 0.6∼0.8 for various sandstones. The reduction of water mobility reduces upward brine migration when even a small amount of exsolution occurs.