This project is a cooperative venture between Cities Service Company and the US Department of Energy. The main objective is to demonstrate the operation and economics of a successful commercial scale In Situ Combustion Project in a heavy oil reservoir. This Third Annual Report deals primarily with performance, development and economics of the project in the third year of operation, with pertinent information from the First and Second Annual Report included for background information. The five elongated patterns were developed for this demonstration on Cities Service Company's Bodcau Fee B lease in the Bellevue Field, Bossier, Parish, Louisiana. This field was discovered in 1921 and is a dome type structure covering approximately 900 productive acres. Production is from the Upper Cretaceous Nacatoch Sand occurring from 300 to 400 feet deep. Primary production by fluid expansion and later gravity drainage amounted to only about five percent of the original oil-in-place. Thirty-eight producers, five injectors and five temperature observation wells are included in the 19-acre project. Estimated recoverable reserves from the project is 700,000 barrels. During the first three years of the contract, cumulative air and water injection has been 7,046,589 MCF and 1,319,270 barrels. Oil production has been 449,816 barrels. This recovery represents 64% of the total estimated recoverable reserves. Current expense at the field level for operations, development, maintenance, well service and Louisiana Severance Total Tax is $10.60 per gross barrel produced.