Abstract: A portable, semi-portable, or permanent system for removing BS&W from crude oil at the local production or bulk storage site. A demulsifier is added to the crude as it enters a low shear pump which pumps the mixture through a plate and frame type heat exchanger where the incoming crude is preheated using outgoing heated and dehydrated crude. Then the incoming crude enters an oil-water separator where it is further heated by a secondary heater within the separator and passes through a special coalescing section. Water and basic sediment separate from the crude are discharged from the bottom of the separator. The heated dehydrated crude exits the separator, flows back through the heat exchanger where it is cooled as it preheats incoming crude, and then is pumped to clean oil storage. BS&W and flow monitors on the incoming crude and outgoing crude are used to control operation of the system.