The objectives of this research were to evaluate roles for microbial processes that would effectively reduce the viscosity of heavy crude oils. These objectives relate to applications such as enhanced oil recovery, transportation of heavy oil and tar sand or oil shale displacement technology. The research concerned the elucidation of the chemical nature and physical properties of biosurfactant in relationship to specific characteristics for application in oil production, processing and transportation. The accomplishments of this research program have been the isolation of microorganisms with the ability to reduce the viscosity of heavy oils 95% or greater through the formation of stable oil-in-water emulsions by extracellular biosurfactants. These microorganisms produce surface active products (biosurfactants) that are equal to, if not superior, to many synthetic surfactants. One bacterial isolate (H-13A) was studied in detail concerning the general physiology of biosurfactant production, the chemical nature and physical properties of the biosurfactant. The biosurfactant exhibits good surface-active properties in the presence of brine and divalent cations, is active between pH 3.5 to 12.0, is stable to 150/sup 0/C, forms stable oil-in-water emulsions, and exhibits phase behavior with formation of a middle phase. Biosurfactant applications studies have demonstrated 95 to 98% viscosity reduction of heavy oils, oil displacement from sand packs and tar sands, and a potential for oil displacement from rock matrices. 10 refs., 6 figs., 14 tabs.