Subterranean system and method for treating and producing oil

A method and system for use in association with a subterranean reservoir containing reservoir material, for separating the reservoir material into components and for producing one or more of the reservoir material components at a surface production location. The reservoir material components include one or more liquid components and a solid component. The system includes a subterranean cavern located below the reservoir. A drain extends between the reservoir and the cavern for draining the reservoir material from the reservoir into the cavern so that the reservoir material may be collected and separated into the reservoir material components in the cavern. A production well extends between the cavern and the surface production location for producing one or more of the reservoir material components at the surface production location. Preferably, one or more of the liquid components are produced at the surface production location while retaining the solid component in the cavern.