A 
filter system for receiving an aqueous-based fluid contaminated with particles and emulsified contaminant oil, removing the particles, and separating the emulsified contaminant oil from the aqueous-based fluid includes a 
filter media for receiving the aqueous-based fluid and emulsified contaminant oil, having an inner 
filter element formed from a 95 percent 
single pass efficiency 48 micron (5 micron nominal) filtering material of needle punch 
polypropylene felt, an outer 
filter element formed from a 95 percent 
single pass efficiency 19 micron absolute filtering material of a 
polypropylene microfiber material and a porous spunbond 
polypropylene sandwiching the outer 
filter media. The 
filter element removes particles, de-emulsifies the emulsified contaminant oil from the aqueous-based fluid into the contaminant oil and the aqueous-based fluid, separates the de-emulsified contaminant oil from the aqueous-based fluid, coalesces the separated contaminant oil and passes both the coalesced de-emulsified contaminant oil with entrained particles and the aqueous-based fluid. A first tank supports the filter element and is further configured to hold a quantity of the separated coalesced contaminant oil and the aqueous-based fluid. The first tank has a first outlet passing the aqueous-based fluid from the first tank to near the bottom of the second tank and a second outlet passing the separated coalesced contaminant oil to the top of the second tank. The second tank has an 
oil separation assembly for separating the aqueous-based fluid from the contaminant oil and passing the aqueous-based fluid therefrom. The second container also has a drain valve 
assembly for removing only the accumulated coalesced de-emulsified contaminant oil. A method for separating the emulsified contaminant oil from the aqueous-based fluid and recovering the aqueous-based fluid is also disclosed.