Transporting heavy crude oil by pipeline requires special facilities because the viscosity is so high at normal field temperatures, In some cases the oil is heated with special heaters along the way, while in others the oil may be diluted by as much as 30 percent with kerosene. Commercial drag reducers have not been found to be effective because the single-phase flow is usually laminar to only slightly turbulent. In this work we show the effective viscosity of heavy oils in pipeline flow can be reduced by a factor of 3-4. It is hypothesized that a liquid crystal microstructure can be formed so that thick oil layers slip on thin water layers in the stress field generated by pipeline flow. Experiments in a I 1/4-in. flow loop with Kern River crude oil and a Venezuela crude oil BCF13 are consistent with this hypothesis. The effect has also been demonstrated under field conditions in a 6-in. flow loop using a mixture of North Sea and Mississippi heavy crude oils containing 10 percent brine.