Either faults or trends can be turned into segment boundaries. All faults from your fault model are segment boundaries by default. If they form a closed "polygon" (are connected in your fault model or through your structural framework in 2010 & 2011) then they will form a segment. If faults are not connected then you need to create trends to connect them (usually its best to have them follow a grid direction after you hit apply for the first time) and then select that trend and make it a segment by clicking on the button on the side bar.
NB. For some simulation purposes sector models are sufficient to define diferent oil water contacts using FIPNUM keywords parsed in Eclipse...
Does that help?