Videomicroscopy was used to observe intermediate phase formation and other dynamic behavior which occurred when drops containing mixtures of n-decane and a short-chain alcohol were contacted with dilute solutions of an amine oxide surfactant. Some equilibrium phase behavior was also determined with n-heptanol as the alcohol to help in interpreting the contacting experiments. In most contacting experiments the first intermediate phase formed was the lamellar liquid crystal. For systems rich in hydrocarbon it grew very rapidly as short and fluid myelinic figures containing substantial amounts of both hydrocarbon and water. The myelinic figures almost immediately disintegrated into a multitude of drops in a process resembling an explosion. For systems rich in alcohol a highly viscous lamellar phase developed around the drop in a configuration resembling a polyhedron. At intermediate alcohol contents oil drops formed spontaneously as the amount of liquid crystal increased. Both the "explosions" and the spontaneous emulsification are likely to be favorable for detergency.