If it is exceeding 3600 RPM, the governor has been played with in the past or it is failing and sticking. It needs the governor shaft checked for binding or wearing into the engine case and or a correct governor adjustment.
It been years since I have seen a governor shaft binding or badly worn, but it is possible.
Coming from a municipality, anything is possible because most barely service the engines and run them to death. 1450 hrs. of commercial use are high hours in this case.
If lucky, just a new governor shaft seal and proper adjustment will keep this running quite a while longer.
Loosing oil is never a good thing.