This report summarizes the work performed during the second year of a research and development project to demonstrate that a particular ancillary material, surfactant based foam, can improve the efficiency of steam drive. The project consists of basic laboratory testing supplemented by five small field tests. The initial laboratory work involved screening foam chemicals for thermal stability and testing methods of placing them deep into a porous media. Tests were also conducted in a sixteen-foot sandpack to verify the emplacement techniques and the capacity of the chemical system to control the mobility of injected steam. The work with these systems has been reported in the first annual report and in SPE/DOE Paper 9777 presented at Tulsa, April 1981. The field test locations were chosen to address two major technical problems encountered in steam drive operations; namely, the excessive channeling of steam through thief zones, and the progressive increase in steam flow through oil-depleted, already swept zones. At this time, two mini-tests have been completed; one with Santa Fe Energy in the Midway-Sunset Field and one with Conoco in the Cat Canyon Field. Two tests with Texaco in the San Ardo Field and a verification test with Santa Fe Energy in the Midway-Sunset Field are still underway.