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What type of oil are we talking about? A standard AW hydraulic oil, UTF oil or gear oil?

The best thing to do is find the source of the water contamination and prevent it from entering the system in the first place. If the equipment is exposed to rain make sure all fill ports and seals are in good condition. In high humidity environments with large temperature variations you can accumulate a lot of water from condensation. As oil is pulled out of the hydraulic sump air is drawn into the sump tank through the breather vent and this moisture in the air can condense inside the tank. There are many manufacturers of water trap or desiccant type breather vents. These type vents trap the water vapor and prevent it from entering the sump tank.

You can install a bypass filter system with a water absorbing filter.

If you have bottom sump tank drains use a good high quality oil that has good demulsibility properties and then drain any accumulated water from the bottom of the tanks.

Your best defense is to stop it from entering the system in the first place. No water in, no water contamination problems. Smile

Both of these products have very good demulsibility properties. One is Hydraulic Oil the other is Gear Oil.
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