It was observed lube oil vapour / gas seen coming out from this line. Lube oil seen trickling and occasionally spurting onto the GLC skid. Why this occur and how to stop this from occurring?

Probably overfilling

1 drop of hydraulic oil every 30 secs was continously observed flowing. The problem is that this oil seepage is in a potential fire hazardous area due to hot spot ie it could catch fire.

It is suggested to extend the drain line into an accumulator due to the back pressure from the Closed Drain Vessel.

lube oil, hydraulic oil, GLC skid,

extend the drain, when it is coming out of the top ?

Who observed?, how "big" was the drop?, how much are you losing?

Sorry, 2 problems from a gas lift compressor (GLC) actually:
1) Oil vapour/gas from atmospheric vent, is it normal to have this?
2) Oil seepage from drain line. Why? Suspected due to backpressure from the closed drain vessel.

1) If vent valve is open something will come out, or eventually go in. If it is liquid, even on a gearbox, some %@# probably doesn't know the difference between a pint and a barrel.

2) Oil seepage from closed drain:
backpressure?
Check the valve !!

I thought this invention (Oilmiser) solves the problem of oil vapor from vent lines:

http://www.machinerylubrication.com/article_printer_friendly.asp?articleid=933

Any comments?

Extend the height of the vent line and install a demister.

How it should be extended? By demister, do you refer to the oilmiser in the link above or a handmade or ready made one?