Introduction: A large amount of water is used in the Upstream, Downstream, Petroleum and Automobile industrial processes and a huge fraction of it comes out as waste after getting polluted by oil and other toxic substances. Liquid wastes from the Petroleum Industries are relatively less toxic in nature and can be easily treated by conventional processes. However, solid wastes, especially oily Waste still remains as major environmental hazards, demanding safer disposal practices. Methodology: Oil contaminated wastewater is an extremely complex and variable waste of organic compounds ranging up to high molecular weight tars and bitumen__ampersandsignlsquo;s. Oily waste disposal is a major threat to the environment since they ultimately deplete the natural capital and degrade the prisnity of the eco system. This is the challenging area for petroleum scientist to establish the method by means of which maximum proportion of oil from the waste can be recovered. Experimental Set-up: There are different Chemical and Biological Treatment methods available. The Need is to optimize different treatment technologies in a cost effective method. The purpose of this work is to increase the oil-water separation by using zeolite treatment along heat treatment. Result and Conclusion: Results show the oil-water phase separation with zeolite treatment, as compared to fly ash. Heat treatment may be effectively used to treat oily waste as it gives more separation in shorter duration of time without creating any environmental as well as human health hazard. Increase in temperature and duration of heating gives more separation and more reduction in phase separation.