An API oil-water separator is a device designed to separate gross amounts of oil and suspended solids from the wastewater effluents of oil refineries, petrochemical plants, chemical plants, natural gas processing plants and other industrial sources. The name is derived from the fact that such separators are designed according to standards published by the American Petroleum Institute (API).

The API separator is a gravity separation device designed by using Stokes Law to define the rise velocity of oil droplets based on their density and size. The design of the separator is based on the specific gravity difference between the oil and the wastewater because that difference is much smaller than the specific gravity difference between the suspended solids and water. Based on that design criterion, most of the suspended solids will settle to the bottom of the separator as a sediment layer, the oil will rise to top of the separator, and the wastewater will be the middle layer between the oil on top and the solids on the bottom.

Typically, the oil layer is skimmed off and subsequently re-processed or disposed of, and the bottom sediment layer is removed by a chain and flight scraper (or similar device) and a sludge pump. The water layer is sent to further treatment consisting usually of a dissolved air flotation (DAF) unit for further removal of any residual oil and then to some type of biological treatment unit for removal of undesirable dissolved chemical compounds.

Parallel plate separators are similar to API separators but they include tilted parallel plate assemblies (also known as parallel packs).[2] The underside of each parallel plate provides more surface for suspended oil droplets to coalesce into larger globules. Any sediment slides down the topside of each parallel plate. Such separators still depend upon the specific gravity between the suspended oil and the water. However, the parallel plates enhance the degree of oil-water separation. The result is that a parallel plate separator requires significantly less space than a conventional API separator to achieve the same degree of separation.

Source: Wikipedia (All text is available under the terms of the GNU Free Documentation License)

For more information (background, pictures, experiments and references): Oil Water Separator