<PAGE>
                                                                   EXHIBIT 10.18

                       SECOND AMENDMENT TO LOAN AGREEMENT


         THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and
entered into as of July 29, 2002 (the "Amendment Effective Date") by and among
NATCO GROUP INC., a Delaware corporation (the "U.S. Borrower") NATCO CANADA,
LTD., a corporation formed under the laws of the Province of Ontario (the
"Canadian Borrower") AXSIA GROUP LIMITED, a company incorporated in England and
Wales under the Companies Act of the United Kingdom (the "U.K. Borrower"); each
of the lenders which is or may from time to time become a party to the Loan
Agreement (as defined below) (individually, a "Lender" and, collectively, the
"Lenders"), JPMORGAN CHASE BANK (successor in interest to The Chase Manhattan
Bank), acting as agent for the U.S. Lenders (in such capacity, together with its
successors in such capacity, the "U.S. Agent"); ROYAL BANK OF CANADA, acting as
agent for the Canadian Lenders (in such capacity, together with its successors
in such capacity, the "Canadian Agent"), and J.P. MORGAN EUROPE LIMITED
(successor in interest to Chase Manhattan International Limited), acting as
agent for the U.K. Lenders (in such capacity, together with its successors in
such capacity, the "U.K. Agent"). The U.S. Borrower, the Canadian Borrower and
the U.K. Borrower are herein collectively called the "Borrowers" and the U.S.
Agent, the Canadian Agent and the U.K. Agent are herein collectively called the
"Agents".

                                    RECITALS

         A. The Borrowers, the Lenders and the Agents executed and delivered
that certain Loan Agreement (as amended, the "Loan Agreement") dated as of March
16, 2001, as amended by instrument dated as of September 17, 2001. Any
capitalized term used in this Amendment and not otherwise defined shall have the
meaning ascribed to it in the Loan Agreement.

         B. The Borrowers, the Lenders and the Agents desire to amend the Loan
Agreement in certain respects.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and warranties herein set forth, and further good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Lenders and the Agents do hereby agree as
follows:

         SECTION 1. Amendments to Loan Agreement. On and after the Amendment
Effective Date, the Loan Agreement is hereby amended as follows:

         (a) The definition of "Commitment Fee Percentage" set forth in Section
1.1 of the Loan Agreement is hereby amended to read in its entirety as follows:

                  Commitment Fee Percentage means the applicable per annum
         percentage set forth at the appropriate intersection in the table shown
         below, based on the Funded Debt to EBITDA Ratio as of the last day of
         the most recently ended fiscal quarter of U.S. Borrower calculated by
         U.S. Agent as soon as practicable after receipt by U.S. Agent of all
         financial reports required under this Agreement with respect to such
         fiscal quarter (including a



<PAGE>

         Compliance Certificate) (provided, however, that if the Commitment Fee
         Percentage is increased as a result of the reported Funded Debt to
         EBITDA Ratio, such increase shall be retroactive to the date that U.S.
         Borrower was obligated to deliver such financial reports to U.S. Agent
         pursuant to the terms of this Agreement and provided further, however,
         that if the Commitment Fee Percentage is decreased as a result of the
         reported Funded Debt to EBITDA Ratio, and such financial reports are
         delivered to U.S. Agent not more than ten (10) calendar days after the
         date required to be delivered pursuant to the terms of this Agreement,
         such decrease shall be retroactive to the date that U.S. Borrower was
         obligated to deliver such financial reports to U.S. Agent pursuant to
         the terms of this Agreement):

<Table>
<Caption>
         Funded Debt to                          Commitment
         EBITDA Ratio                            Fee Percentage
         --------------                          --------------
<S>                                              <C>
         Greater than or equal to
         3.00 to 1.00                                 0.625

         Greater than or equal to
         2.50 to 1.00 but less than
         3.00 to 1.00                                 0.50

         Greater than or equal to
         2.00 to 1.00 but less than
         2.50 to 1.00                                 0.40

         Greater than or equal to
         1.50 to 1.00 but less than
         2.00 to 1.00                                 0.35

         Less than 1.50 to 1.00                       0.30
</Table>

         (b) The definition of "Fixed Charge Coverage Ratio" set forth in
Section 1.1 of the Loan Agreement is hereby amended to read in its entirety as
follows:

                  Fixed Charge Coverage Ratio means, as of any day, the ratio of
         (a) Pro Forma EBITDA for the 12 months ending on such day less the
         current portion of federal, state and provincial income tax expense
         recognized during such 12-month period to (b) the sum of (1) the
         principal component of Debt Service for such 12-month period plus (2)
         cash Interest Expense for such 12-month period paid by U.S. Borrower
         and its Subsidiaries for such 12-month period plus (3) Permitted
         Dividends by U.S. Borrower or by any Subsidiary of U.S. Borrower to any
         Person other than U.S. Borrower (or a wholly-owned Subsidiary of U.S.
         Borrower) for such 12-month period plus (4) actual Capital Expenditures
         paid by U.S. Borrower and its Subsidiaries for such 12-month period
         (exclusive of Capital Expenditures associated with the expansion of the
         West Texas C02 processing facility of the U.S. Borrower, in amounts not
         exceeding those permitted under this Agreement).



                                       2
<PAGE>

         (c) The definition of "Margin Percentage" set forth in Section 1.1 of
the Loan Agreement is hereby amended to read in its entirety as follows:

             Margin Percentage means the applicable per annum percentage
         set forth at the appropriate intersection in the table shown below,
         based on the Funded Debt to EBITDA Ratio as of the last day of the then
         most recently ended fiscal quarter of U.S. Borrower calculated by U.S.
         Agent as soon as practicable after receipt by U.S. Agent of all
         financial reports required under this Agreement with respect to such
         fiscal quarter (including a Compliance Certificate) (provided, however,
         that if the Margin Percentage is increased as a result of the reported
         Funded Debt to EBITDA Ratio, such increase shall be retroactive to the
         date that U.S. Borrower was obligated to deliver such financial reports
         to U.S. Agent pursuant to the terms of this Agreement and provided
         further, however, that if the Margin Percentage is decreased as a
         result of the reported Funded Debt to EBITDA Ratio, and such financial
         reports are delivered to U.S. Agent not more than ten (10) calendar
         days after the date required to be delivered pursuant to the terms of
         this Agreement, such decrease shall be retroactive to the date that
         U.S. Borrower was obligated to deliver such financial reports to U.S.
         Agent pursuant to the terms of this Agreement):

<Table>
<Caption>
                                                                              Canadian Prime Loans/
         Funded Debt to                          LIBOR Borrowings              Base Rate Borrowings
         EBITDA Ratio                            Margin Percentage              Margin Percentage
         --------------                          -----------------            ---------------------
<S>                                              <C>                          <C>
         Greater than or equal to
         3.25 to 1.00                                  3.00                           1.50

         Greater than or equal to
         3.00 to 1.00 but less than
         3.25 to 1.00                                  2.75                           1.25

         Greater than or equal to
         2.50 to 1.00 but less than
         3.00 to 1.00                                  2.50                           1.00

         Greater than or equal to
         2.00 to 1.00 but less than
         2.50 to 1.00                                  2.25                           0.75

         Greater than or equal to
         1.50 to 1.00 but less than
         2.00 to 1.00                                  2.00                           0.50

         Less than 1.50 to 1.00                        1.75                           0.25
</Table>

         (d) Section 7.3(b) of the Loan Agreement is hereby amended to read in
its entirety as follows:



                                       3
<PAGE>
                  (b) Funded Debt to EBITDA Ratio - a Funded Debt to EBITDA
         Ratio of not greater than (1) 3.50 to 1.00 at all times during the
         period commencing on July 1, 2002 through and including September 30,
         2002, (2) 3.25 to 1.00 at all times during the period commencing on
         October 1, 2002 through and including March 31, 2003, (3) 3.00 to 1.00
         at all times during the period commencing on April 1, 2003 through and
         including June 30, 2003, and (4) 2.50 to 1.00 at all times thereafter.

         (e)      Section 7.3(c) of the Loan Agreement is hereby amended to
read in its entirety as follows:

                  (c) Fixed Charge Coverage Ratio - a Fixed Charge Coverage
         Ratio of not less than (1) 1.15 to 1.00 at all times during the period
         commencing on April 1, 2002 through and including June 30, 2002,
         (2) 1.00 to 1.00 at all times during the period commencing on July 1,
         2002 through and including March 31, 2003 and (3) 1.25 to 1.00 at all
         times thereafter.

         (f)      Section 8.1 of the Loan Agreement is hereby amended to
read in its entirety as follows:

                  8.1 Borrowed Money Indebtedness. Create, incur, suffer or
         permit to exist, or assume or guarantee, directly or indirectly, or
         become or remain liable with respect to any Borrowed Money
         Indebtedness, whether direct, indirect, absolute, contingent or
         otherwise, except the following: (a) Borrowed Money Indebtedness under
         this Agreement and the other Loan Documents and Borrowed Money
         Indebtedness secured by Liens permitted by Section 8.2 hereof; (b) the
         liabilities existing on the date of this Agreement and disclosed in the
         financial statements delivered on or prior to the Effective Date
         pursuant to Section 6.2 hereof, and subject to Section 8.10 hereof, all
         renewals, extensions and replacements (but not increases) of any of the
         foregoing; (c) the Interest Rate Risk Indebtedness; (d) purchase money
         indebtedness to acquire Equipment obtained by U.S. Borrower or any of
         its Subsidiaries in the ordinary course of business not exceeding
         $3,000,000 at any one time outstanding, in the aggregate for all such
         indebtedness; (e) Borrowed Money Indebtedness of National Tank Company
         and its Subsidiaries under the EXIM Facility; (f) Borrowed Money
         Indebtedness created under leases which, in accordance with GAAP have
         been recorded or should be recorded as capital leases, in an aggregate
         amount not to exceed $2,000,000 at any one time outstanding; (g)
         pre-existing Borrowed Money Indebtedness, not to exceed $2,000,000 in
         the aggregate at any one time outstanding, secured by Liens upon assets
         which are acquired after the date hereof or owing by Persons which
         become Subsidiaries of U.S. Borrower by acquisition after the date
         hereof (provided, however, that no such Borrowed Money Indebtedness was
         incurred at the instigation of U.S. Borrower in contemplation of such
         acquisition), (h) Borrowed Money Indebtedness in an aggregate amount
         not to exceed $7,500,000 at any one time outstanding on terms
         acceptable to the Majority Lenders which is subordinated to the
         Obligations in a manner and pursuant to documentation acceptable to the
         Majority Lenders, and (i) without limitation of any other part of this
         Section, (1) contingent Borrowed Money Indebtedness of U.S. Borrower or
         any of its Subsidiaries in respect of surety bonds created, incurred or
         assumed after the Effective Date, in an aggregate amount not to exceed
         $12,500,000 at any one time outstanding and (2) other Borrowed Money
         Indebtedness of U.S. Borrower or any of its Subsidiaries created,



                                       4

<PAGE>

         incurred or assumed after the Effective Date, in an aggregate amount
         not to exceed $10,000,000 at any one time outstanding.

         (g)      Section 8.2 of the Loan Agreement is hereby amended to
read in its entirety as follows:

                  8.2 Liens. Create or suffer to exist any Lien upon any of its
         Property now owned or hereafter acquired, or acquire any Property upon
         any conditional sale or other title retention device or arrangement or
         any purchase money security agreement; or in any manner directly or
         indirectly sell, assign, pledge or otherwise transfer any of its
         Accounts or General Intangibles; except: (a) Liens created pursuant to
         any Loan Document; (b) Permitted Liens; (c) Liens upon "International
         Collateral" (as defined in the EXIM Facility) securing the EXIM
         Facility, (d) other Liens securing the EXIM Facility which are
         subordinate and inferior to the Liens created pursuant to the Loan
         Documents, (e) pre-existing Liens securing pre-existing Borrowed Money
         Indebtedness permitted under Section 8.1 (g) hereof covering the
         applicable acquired asset or covering Property of the applicable
         acquired Subsidiary of U.S. Borrower (provided, however, that no such
         Liens were created and no such Borrowed Money Indebtedness was incurred
         at the instigation of U.S. Borrower in contemplation of such
         acquisition) and (f) Liens securing subordinated Borrowed Money
         Indebtedness permitted under Section 8.1(h) hereof covering Property
         constituting Collateral and which are subordinated to the Security
         Documents in a manner and pursuant to documentation acceptable to the
         Majority Lenders.

         (h)      Section 8.10 of the Loan Agreement is hereby amended to
read in its entirety as follows:

                  8.10 Key Agreements. Terminate or agree to the termination of
         any Key Agreement or amend, modify or obtain or grant a waiver of any
         provision of any of the Key Agreements if such action could reasonably
         be expected to have a Material Adverse Effect (provided that no consent
         of any Agent or any Bank shall be required with respect to an amendment
         of the EXIM Facility which has the sole effect of increasing the EXIM
         Facility to an amount not greater than $20,000,000).

         (i)      Section 8.13 of the Loan Agreement is hereby amended to
read in its entirety as follows:

                  8.13 Operating Lease Expenses. Aggregate operating lease
         expenses (excluding lease payments under capital leases) shall not
         exceed, for U.S. Borrower and its Subsidiaries, in the aggregate in any
         fiscal year, $6,000,000.

         (j)      A new Section 8.19 is hereby added to the Loan Agreement, such
new Section to read in its entirety as follows:

                  8.19 Limitation on Certain Capital Expenditures. Capital
         Expenditures associated with the expansion of the West Texas C02
         processing facility of the U.S. Borrower shall not exceed $7,500,000 in
         the fiscal year 2002 and shall not exceed $15,000,000 in the aggregate.



                                       5
<PAGE>

         SECTION 2. Ratification. Except as expressly amended by this Amendment,
the Loan Agreement and the other Loan Documents shall remain in full force and
effect. None of the rights, title and interests existing and to exist under the
Loan Agreement are hereby released, diminished or impaired, and the Borrowers
hereby reaffirm all covenants, representations and warranties in the Loan
Agreement.

         SECTION 3. Amendment Fee. As a condition precedent to the effectiveness
of this Amendment, the Borrower shall pay to the Agent (for payment to the
applicable Lenders) a fee equal to 0.25% times the sum of (x) the Canadian
Commitment of each Lender which shall have joined in the execution of this
Amendment plus (y) the U.K. Commitment of each such Lender plus (z) the U.S.
Commitment of each such Lender.

         SECTION 4. Expenses. The Borrowers shall pay to the Agents all
reasonable fees and expenses of their respective legal counsel (pursuant to
Section 11.3 of the Loan Agreement) incurred in connection with the execution
of this Amendment.

         SECTION 5. Certifications. The Borrowers hereby certify that (a) no
event which could reasonably be expected to have a Material Adverse Effect has
occurred and is continuing and (b) no Default or Event of Default has occurred
and is continuing or will occur as a result of this Amendment.

         SECTION 6. Miscellaneous. This Amendment (a) shall be binding upon and
inure to the benefit of the Borrowers, the Lenders and the Agents and their
respective successors, assigns, receivers and trustees; (b) may be modified or
amended only by a writing signed by the required parties; (c) shall be governed
by and construed in accordance with the laws of the State of Texas and the
United States of America; (d) may be executed in several counterparts by the
parties hereto on separate counterparts, and each counterpart, when so executed
and delivered, shall constitute an original agreement, and all such separate
counterparts shall constitute but one and the same agreement and (e) together
with the other Loan Documents, embodies the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, consents and understandings relating to such subject matter.
The headings herein shall be accorded no significance in interpreting this
Amendment.

             NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SECTION 26.02

         THE LOAN AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND ALL OTHER LOAN
DOCUMENTS EXECUTED BY ANY OF THE PARTIES PRIOR HERETO OR SUBSTANTIALLY
CONCURRENTLY HEREWITH CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



                                       6
<PAGE>

         IN WITNESS WHEREOF, the Borrowers, the Lenders and the Agents have
caused this Amendment to be signed by their respective duly authorized officers,
effective as of the date first above written.

                                       NATCO GROUP INC,
                                       a Delaware corporation


                                       By: /s/ J. MICHAEL MAYER
                                          --------------------------------------
                                          J. Michael Mayer, Senior Vice
                                          President and Chief Financial Officer


                                       NATCO CANADA, LTD., a corporation formed
                                       under the laws of the Province of Ontario


                                       By: /s/ J. MICHAEL MAYER
                                          --------------------------------------
                                          J. Michael Mayer, Vice President


                                       AXSIA GROUP LIMITED,
                                       a company incorporated in England and
                                       Wales under the Companies Act of the
                                       United Kingdom


                                       By: /s/ J. MICHAEL MAYER
                                          --------------------------------------
                                          J. Michael Mayer,
                                          Authorized Signatory



                                       7
<PAGE>

                                       JPMORGAN CHASE BANK, as U.S. Agent,
                                       Issuer of U.S. Letters of Credit and a
                                       U.S. Lender


                                       By: /s/ ROBERT W. TRABAND
                                          --------------------------------------
                                       Name: Robert W. Traband
                                            ------------------------------------
                                       Title: Vice President
                                             -----------------------------------



                                       8
<PAGE>

                                       J.P. MORGAN EUROPE LIMITED,
                                       as U.K. Agent


                                       By: /s/ S. CLARKE          /s/ N. HALL
                                          --------------------------------------
                                       Name: S. Clarke                N. Hall
                                            ------------------------------------
                                       Title: Vice President          Associate
                                             -----------------------------------

-



                                       9
<PAGE>

                                       JPMORGAN CHASE BANK,
                                       as Issuer of U.K. Letters of Credit and a
                                       U.K. Lender


                                       By: /s/ ROBERT W. TRABAND
                                          --------------------------------------
                                       Name: Robert W. Traband
                                            ------------------------------------
                                       Title: Vice President
                                             -----------------------------------



                                       10
<PAGE>

                                       ROYAL BANK OF CANADA, as Canadian Agent,
                                       Issuer of Canadian Letters of Credit and
                                       a Canadian Lender


                                       By: /s/ JASON YORK
                                          --------------------------------------
                                       Name: Jason York
                                            ------------------------------------
                                       Title: Manager
                                             -----------------------------------



                                       11
<PAGE>

                                       WELLS FARGO BANK TEXAS, NATIONAL
                                       ASSOCIATION


                                       By: /s/ BRET C. WEST
                                          --------------------------------------
                                       Name: Bret C. West
                                            ------------------------------------
                                       Title: Vice President
                                             -----------------------------------



                                       12
<PAGE>

                                       BANK ONE, NA (MAIN OFFICE CHICAGO,
                                       ILLINOIS), as Syndications Agent and a
                                       U.S. Lender


                                       By: /s/ MARK L. WAYNE
                                          --------------------------------------
                                       Name: Mark L. Wayne
                                            ------------------------------------
                                       Title: Vice President
                                             -----------------------------------



                                       13
<PAGE>

                                       ARAB BANKING CORPORATION B.S.C.


                                       By: /s/ BARBARA C. SANDERSON
                                          --------------------------------------
                                       Name: Barbara C. Sanderson
                                            ------------------------------------
                                       Title: V P Head of Credit
                                             -----------------------------------



                                       14
<PAGE>

                                       DEUTSCHE BANK TRUST COMPANY AMERICAS
                                       (formerly known as Bankers Trust Company)


                                       By: /s/ MARCUS M. TARKINGTON
                                          --------------------------------------
                                       Name: Marcus M. Tarkington
                                            ------------------------------------
                                       Title: Director
                                             -----------------------------------



                                       15
<PAGE>

                                       MIDFIRST BANK


                                       By: /s/ W. THOMAS PORTMAN
                                          --------------------------------------
                                       Name: W. Thomas Portman
                                            ------------------------------------
                                       Title: Vice President
                                             -----------------------------------



                                       16
<PAGE>

         The undersigned hereby join in this Amendment to evidence their consent
to execution by Borrowers of this Amendment, to confirm that each Loan Document
now or previously executed by the undersigned applies and shall continue to
apply to the Loan Agreement, as amended hereby, to acknowledge that without such
consent and confirmation, Lender would not execute this Amendment and to join in
the notice pursuant to Tex. Bus. & Comm. Code Section 26.02 set forth above.


                                       NATIONAL TANK COMPANY, a Delaware
                                       corporation, TOTAL ENGINEERING SERVICES
                                       TEAM, INC., a Louisiana corporation, and
                                       NATCO LONDON, INC., a Delaware
                                       corporation


                                       By: /s/ J. MICHAEL MAYER
                                          --------------------------------------
                                          J. Michael Mayer, Vice President and
                                          Treasurer


                                       STARFISH ACQUISITION LIMITED, a company
                                       incorporated in England and Wales under
                                       the Companies Act of the United Kingdom,
                                       and AXSIA GROUP LIMITED, a company
                                       incorporated in England and Wales under
                                       the Companies Act of the United Kingdom


                                       By: /s/ J. MICHAEL MAYER
                                          --------------------------------------
                                       Name: J. Michael Mayer
                                            ------------------------------------
                                       Title: Director
                                             -----------------------------------



                                       17
<PAGE>

                                       AXSIA LIMITED, a company incorporated in
                                       England and Wales under the Companies Act
                                       of the United Kingdom, AXSIA SERCK BAKER
                                       LIMITED, a company incorporated in
                                       England and Wales under the Companies Act
                                       of the United Kingdom, AXSIA HOWMAR
                                       LIMITED, a company incorporated in
                                       England and Wales under the Companies Act
                                       of the United Kingdom, and RICHARD MOZLEY
                                       LIMITED, company incorporated in England
                                       and Wales under the Companies Act of the
                                       United Kingdom


                                       By: /s/ J. MICHAEL MAYER
                                          --------------------------------------
                                       Name: J. Michael Mayer
                                            ------------------------------------
                                       Title: Director
                                             -----------------------------------



                                       18