Three-phase separation is achieved downhole in a production well by forming an oil/liquid separation zone in the well between two packers which are positioned between producing and disposal zones. Gas is permitted to separate above the top packer. A pump is used to pump an oil/water mixture from above the top packer into the separation zone. Adequate residence time is permitted in the separation zone to achieve the separation. A check valve in the bottom packer is used to provide pressure to raise the oil to the wellhead. A control valve at the wellhead is used to control pressure in the separation zone and the relative sizes of the streams issuing therefrom.