A method of characterizing a borehole traversing an earth formation including (a) obtaining an array of data from a formation characterization tool, wherein the data describes a section of the borehole; (b) computing at least one spatial characteristic describing the relative position of pairs of data; (c) assigning said pairs of data to bins based on the spatial characteristic, wherein the size of the bins are selected based on the tool; (d) transforming the data to petrophysical properties of the borehole; (e) calculating the variance of each bin; (f) developing a model of the variances; (g) determining at least one geostatistical parameter using the model; and (h) upscaling the geostatistical parameters to characterize a region of said earth formation. The method may further include generating a heterogeneity index log using the geostatistical model parameters. The method may be implemented using a computer program product for processing and interpreting borehole data.