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In Starbound, there are many new things introduced into the game in the Nightly builds (for the upcoming Winter update). One of which is many changes to progression...

I'm up to a part where you're meant of craft Steel. Except Steel is not crafted from a Metalworking Station (made of 1 Iron + 1 Coal). Instead, it is made from an alloy furnace using 3 Oil + 1 Iron.

Iron is plentiful for me; I can find them easily by digging further down into the surface of a planet. But I've haven't come across any signs of oil.

Question: Where does oil commonly spawn?
Is there a minimum planet treat "level" (not a number) or is it tied to specific biomes? Or what?

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  • I've found out where they spawn. But I'm not spilling the beans (posting the answer) until somebody finds out themselves (a shot at some reputation).
    – aytimothy
    Dec 19, 2014 at 14:43
  • So is this just in the unstable builds at the moment? I haven't played in a while but I gather the stable build hasn't been updated since March.
    – Krjax
    Dec 19, 2014 at 15:56
  • Yes, @Krjax, It's all only in the unstable nightly builds.
    – aytimothy
    Dec 19, 2014 at 18:21

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Oil can be found under the surface, in caverns of Desert planets.

References:

  1. The wiki: http://starbound.gamepedia.com/Oil
  2. This picture:
    The dark water is oil.

The dark water seen in this picture is not water found in the underground tar biome (stable builds). They inflict a debuff when walked into and can be mined with a liquid-upgraded Matter Manipulator.

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    Some underground biome also have oil instead of water, but since you wouldn't know until you dig down, better just go desert for oil.
    – Ben Ong
    Jan 17, 2018 at 2:04
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It can not only be found in caves but there are also small to huge lakes of oil on the surface (tar biomes).

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    Do you have a picture? And are you talking about the stable builds or the nightly builds? And I hope this answer isn't a comment.
    – aytimothy
    Dec 30, 2014 at 14:18
  • They do appear on the surface, but I'm pretty sure that's the over-burned or frozen ocean planets.. (Either one of them) | And the tar biome doesn't exist anymore.. Not that I could find it.
    – aytimothy
    Jan 30, 2015 at 23:50
  • I just landed on a desert planet and there was a tar biome that contained oil. It doesn't seem to appear on all desert planets though so you may have to visit a few to find some.
    – VanBuzzKill
    Jan 31, 2015 at 2:35
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I Found some oil in tar biomes but I couldn't find any underground...

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