The problem is that many oil tanks are corroding from the inside out, so the failure is not readily visible. This often occurs from condensation that builds up inside the tank. Since oil is lighter than water, the water goes to the bottom of the tank and causes corrosion. The first sign of a bad tank could be an odour of oil in the air. There might be rust or corrosion where the legs are welded to the tank.
Other symptoms could include a leak in the fuel filter or the nozzle becoming plugged. Insurance companies are concerned that an old oil tank can leak and spill hundreds of litres of heating oil into the home, or into the ground. Spilled oil can quickly contaminate soil and groundwater. If the leak finds its way into a sump pump or floor drain, the spill will undoubtedly make it a very expensive clean up. With outside storage tanks, where rust and corrosion are more common, a spill can contaminate the soil or make its way into the nearby streams or rivers.
What may seem like a simple clean-up can in fact be a complicated task to replace the leaking tank and supply lines, remove contaminated soil, replace the foundation and treat groundwater.
The cost to repair a leaking oil tank can range from several hundred to several thousand dollars. The most commonly used tanks for heating oil are steel containers that hold about 1,000 litres and weigh close to 1,000 kg when full. Their odd shape, which lets them easily pass through doorways, also makes them unstable unless they are properly secured from tipping over.
Excerpted from the CREA "Understanding Oil Tanks" publication