Starting with the basics, air naturally contains moisture (humidity), and compressing the air squeezes out that moisture. Besides collecting in the compressor's tank, it migrates its way through the lines to your work area. Cooling the air condenses the moisture so it can be collected before it gets to your storage tank. The outlet temps I've registered at my compressor's head are above 200 degrees, and each 20 degrees the air is cooled drops out 50% of the entrained moisture.
Ricko's solution works. If you have enough copper line and keep it cold enough, much of the moisture will condense and drop out with a provided gravity path. I run my compressor for extended periods of time and the heated copper would melt the ice way too quickly for my needs. I went overboard in my quest for dry air, beyond the needs of most garages.
I originally bought two Pneumatech refrigerated coolers from Craigslist. Thinking one would be enough, I sold the second one for more than I paid for the pair, so I got one for free. I later decided that I wanted MORE cooling and added a second unit I got from Harbor Freight. Installation was just a matter of removing the compressor's external plumbing and running the first-stage exit port to the top cooler, back to the second-stage intake, then the second-stage exits to the Pneumatch and back to the storage tank.
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Figuring any moisture that managed to get beyond the coolers would collect in the tank, I added a self-actuating drain valve to the bottom of the tank. I also added a spit valve to the inside of each cooler so no maintenance is required, they spit each time the compressor shuts off. A coffee can collects the drainage and evaporates into the air.
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Since my compressor sits in a small hallway off the garage, there isn't a lot of air flow and the coolers were operating at temps above recommendations. I added a couple of fans that are wired directly to the compressor motor and kick on whenever the compressor does. The bottom one is a repurposed house fan and the top one is a puller from a commercial refrigeration unit that was being scrapped. Total cost = zero.
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My final bit of overkill was adding a couple of conventional air dryers between the tank and hose reel. The bottom one is a membrane filter, and the one above it is a desiccant filter that collects any moisture or particulates coming from the tank. Probably wasn't necessary but I kinda got wrapped up in the details. I've been running this setup for over ten years and it works really well.
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