The use of the core-annular flow pattern, where a thin fluid surrounds a very viscous one, has been suggested as an attractive artificial-lift method for heavy oils in the current Brazilian ultra-deepwater production scenario. This paper reports the pressure drop measurements and the core-annular flow observed in a 2 7/8-inch and 300 meter deep pilot-scale well conveying a mixture of heavy crude oil (2000 mPa.s and 950 kg/m3 at 35 C) and water at several combinations of the individual flow rates. The two-phase pressure drop data are compared with those of single-phase oil flow to assess the gains due to water injection. Another issue is the handling of the core-annular flow once it has been established. High-frequency pressure-gradient signals were collected and a treatment based on the Gabor transform together with neural networks is proposed as a promising solution for monitoring and control. The preliminary results are encouraging. The pilot-scale tests, including long-term experiments, were conducted in order to investigate the applicability of using water to transport heavy oils in actual wells. It represents an important step towards the full scale application of the proposed artificial-lift technology. The registered improvements in terms of oil production rate and pressure drop reductions are remarkable.10PETROBRAS (Petroleo Brasileiro S.A.)