The residence time required would depend on a number of factors like:
1. The BOD/COD loading to the biotreatment
unit which in your case is directly related
to the quantity of oil needing treatment.
2. The actual "treatability" of the waste
in the water. One measure of this is the Monod rate constants for the particular waste.
3. The presence or absence of biological inhibitors and/or nutrients.
4. The desired endpoint concentration of oil in the waste.
5. The total volumetric flow to the treatment unit.
If your waste is unusual, then a lab treatability study would probably be recommended to determine the design parameters for the full scale unit.
If you need further advice, you can contact me at robert@rbcoulter.com