Abstract: A hydraulic oil well pumping system is provided. The system uses a pump to exert hydraulic pressure against a reciprocating lift piston over a wellbore. The lift piston is operatively connected to a rod string and downhole pump for pumping oil from a wellbore. Thus, oil is pumped from the wellbore as the rod string and downhole pump move between upper and lower rod positions. In addition, the system includes at least one compressor cylinder having a compressor piston that reciprocates with the lift piston in order to compress produced gas at the surface. A method for compressing gas while pumping oil from a wellbore using such a system is also provided herein.