An oil-water separator for use in a trench, which surrounds an oilfield. The separator is positioned in the ground such that an inlet conduit extends at about the same level as the bottom of the trench. The trench water is admitted into the housing, where it contacts a plurality of buoyant oil-absorbing members, causing the oil particles to adhere to the surface of the oil-absorbing members. An outlet conduit located downstream from the oil-absorbing members is connectable to a pump to cause the oil-free water to be pumped from the housing and diverted away from the trench.