Carbonate fractured-vuggy reservoirs in Tahe oilfield have complex geological characteristics, which is mainly reflected in the various forms such as pore, fracture and cave developed in the reservoir, poor continuity of spatial distribution, complex combination mode, and the residual fracture-vuggy storage space formed in surface karst system by weathering. During the development, it is easy to form the bottom water coning along the high angle crack. The remaining oil between the wells outside the water channels and the “attic oil” stored by the residual fault are enriched in large quantities. In the earlier stage, the macroscopic mechanism of gravity displacement by using density difference in N₂ injection of seam-hole reservoir is clarified by means of physical simulation. However, the displacement mechanism of the “attic oil” and the residual oil between wells is not clear. Through the simulation experiments of the effects of the injected N₂ on the physical properties of crude oil under the conditions of 55 MPa and 130 ℃, the micro mechanism such as the effects of N₂ on dissolution, expansion, capacity increase, extraction and dissolution of crude oil under the condition of high temperature and high pressure reservoir. Based on the fractured-vuggy geological characterization, visual physical model is made to observe the displacement mechanism of gravity displacement and water coning suppression during N₂ injection. After field application, the feasibility and popularization potential of the technology are further proved.