Compressed air is compressed and discharged at elevated temperatures in a saturated state. As the air cools through aftercoolers, dryers, or pipelines, the water vapor condenses into a liquid form which then mixes with the normal oil carryover from the compressor. The condensate becomes contaminated by the oil and must be treated before expelling it into a sewer system or onto the ground. The oil must be separated from the condensate and only the condensate can be expelled. The oil must be reclaimed and disposed of in an environmentally safe manner.