Hi Ron,
I have been giving your scenario a good bit of thought. I think your oil consumption and additional fuel consumption is due to a lack of a substantial load on the generator. While looking at my F4L912 brochure I see that it is a 3.7 liter engine producing 45 horsepower at 1800rpm. With a stated 0.370lb/hp hour maximum fuel consumption that is 16.65lbs of fuel per hour, or a maximum of 2.34 gallons per hour of fuel used. When you reverse your calculations using the numbers you provided, at 0.68 gph the engine is only pulling a 13 horsepower load, and at 0.88gph the engine is only pulling a 17 horsepower load. An engine of that size is likely coupled to a 25-30KW generator. I believe your generator has been run too long without enough of a load on it to keep cylinder temperatures hot enough to burn all of the fuel provided. (Research wet-stacking) Chances are the cylinders are now glazed over and the compression is suffering, and the rings are having a hard time sealing up. Does your generator have a built in auxiliary electric heater for load testing? Perhaps you should run the generator at full load for a couple of hours to help the rings re-seat and restore compression. If that does not fix your oil consumption problem, you might have to hone the cylinders and re-ring the engine. Out of curiosity, how many hours are on this generator, and what oil are you running in the engine? You should be running a good quality 15W40 CF-4 oil in it. Your oil changes should be every 250 hours on a genset.
The 912/913/914 series Deutz Diesel engines are relatively simple. Short of an external oil leak (leaking oil cooler, loose or cracked pushrod covers, loose oil filter, oil pan leak, oil line to fan, crank seals), the only places that oil could be disappearing from would be through worn valve guides or worn piston rings. Since there is an increase in blowby I would say the rings are on their way out (Again research wet-stacking). The 911/912/913/914 engines do not have wrist pin seals, so no possibility of leaking wrist pin seals. Is the engine smoking all of the time? If the cylinder walls are glazed over, or the engine has bad rings it will smoke all of the time. If the engine has bad valve guides, run the engine at speed to get the heads/valves and guides hot, then let it idle. If it smokes noticeably more on deceleration the valve guides are worn.
Deutz used several different fans on their engines, some were direct driven and ran all of the time, others had a fan which was controlled by engine oil pressure, others had a fan which was controlled by exhaust manifold temperature. The last is the most complex, there is a thermostat on the bottom of the exhaust manifold which determines how much oil pressure can pass through the pilot valve to the fan. It is a relatively complex temperature switch and can be calibrated. If the fan is not coming on, the temperature switch can be bypassed so that the fan runs 100% of the time. There is a bit to it, I can send you a Deutz service manual if you need. You should be able to tell when it is running. It will make a good bit of fan noise and you will feel a jet of hot air blowing off of the cylinders. If it werent getting enough cooling air it would lock up on you in short order. All of the air cooled Deutz diesel engines have a fan belt sensor which shuts the engine off if the fan belt fails.
Try topping off the oil and running the generator under full load for a couple of hours. I would bet that the oil consumption will drop off. Fuel consumption might increase due to the test, but should stabilize again once the rings have re-seated. Should that be, it would be a good idea to load test the generator more often to keep it from wet-stacking again and again.
Chris