The water content of a crude oil containing surfactant is reduced to less than 0.5 weight percent by first conventionally drying the crude oil to a water concentration less than about 10%, then contacting the crude oil with a low molecular weight alcohol to effect a phase separation into an aqueous layer and an oil layer, thereafter separating these layers to obtain a dried oil and an aqueous alcoholic surfactant solution. The alcohol can then be separated from the aqueous alcoholic surfactant solution. The recovered alcohol can be recycled through the system and the recovered surfactant can be reused in another micellar flood.
