Abstract: An apparatus removes water from a liquid mixture which has formed in a compressed gas system. The apparatus includes a gas compressor having an inlet port for receiving low pressure gas to be compressed and a discharge port through which a stream of compressed gas flows. An aftercooler is disposed in fluid communication with the discharge port for cooling the compressed gas stream. A vessel collects any entrained liquid water and lubricant from the compressed gas stream. The vessel has a sump portion and a vent to an atmosphere external to the compressed air system. A heat exchanger heats the liquid mixture within the vessel to a predetermined temperature to vaporize the water. The water vapor exits the vessel through the vent and the lubricant remains in the sump portion of the vessel. A valve permits the separated lubricant to be drained from the sump portion of the vessel to a location external to the compressed air system.