Underground Oil Tanks

Oil is one of the most common fuels for residential heating systems. When used in a good quality and well maintained burner, oil can be a very clean, relatively efficient, and a cost effective method to heat our homes. The most common way to store and deliver the fuel oil to the furnace or boiler is by the use of an underground storage tank and a set of pipes which lead from the tank to the burner. These underground tanks and pipes are the cause of a great deal of concern, and the subject of misinformation and confusion.


  • Depending on who you talk to, the possibility that a specific oil storage system is leaking ranges from less than one percent to fifty percent. The limited data collected by Sound Home Inspection Inc. suggests that a realistic number is somewhere in the middle of that range.

    Even less is known about the severity of such leaks. At the extreme ends of the spectrum there are leaks which contaminate a few square feet of soil. Then there are the leaks from oil tanks which have contaminated many truckloads full of soil. Translated into the cost of cleanup, the range is from a few hundred dollars to over $100,000.

    The fact that an oil tank has leaked and has contaminated the soil usually comes as a surprise to the owner and user of a property. Most oil contamination from underground tanks is not detectable at the surface. Such contamination is often the result of a slow ongoing leak which may not be significant enough to notice a large increase in oil consumption. When contamination is detected, it is usually the result of tank removal, construction work, or soil tests. Some oil leaks are also found as a result of water in the tank, or a dramatic increase in oil consumption as a result of a large hole in the tank. In rare occasions, oil seepage is detected in a basement, drainage system, or the hillside adjacent to the tank.

    Some of the factors which contribute to oil tank and oil line leaks are: the age of the tank, the quality of the installation work, the condition of the soil, and luck. Well drained and sandy soil is conducive to long tank life. Wet and clay like soils promote rust and leaking tanks. Finding water inside a tank is a sign of a leaking tank. However, it is not positive proof nor does it indicate how much oil has leaked out of the tank, or for how long.

  • The environmental consequences of leaking residential oil tanks are a subject of controversy. There is little doubt that contaminated soil in an area which uses an aquifer for drinking water can be a great problem. The severity of this problem may also be related to the amount of contamination, soil conditions, depth of the aquifer, etc. There is little doubt that soil contamination can pollute streams and wildlife habitats. We also know that some contamination from abandoned tanks has not spread, and would not have been detected unless the soil was exposed. So here we have another environmental issue which does not lend itself to a simple answer.

    But there is little controversy about the financial impact of contaminated soil. Up until recently, most of the concern has been related to commercial properties. In the last few years, this concern has also impacted the use and sale of residential real estate. As a result of these concerns, changes in the market place are occurring, such as, popular alternative fuels (e.g. natural gas) have received an extra boost, more and more soil testing is being performed as a part of real estate transactions, and new businesses have been started to address various facets of this issue (e.g. tank and soil mitigation services).

  • There are three basic forms of insurance related to the consequences of using an underground oil tank, they are as follows:

    • Standard oil tank insurance policies pay for the installation of a new tank. Most policies of this type exclude coverage for any kind of cleanup.
    • In 1995, the Washington State Legislature authorized the creation of an insurance pool which is designed to protect the owners of existing oil heated homes, small businesses, churches, and schools from the liability of contamination from spills or leaks. The premiums for the insurance are paid by the heating oil dealers. For more information, contact the Oil Heat Institute of Washington at (206) 548-1500. The program is being implemented by the Pollution Liability Insurance Agency. The Pollution Liability Insurance Agency can be contacted at (360) 586-5997. This insurance covers in-use tanks which have been registered with the agency and which experienced leaks after January 1 1996. Analytic testing, oil consumption data, and other methods are being used by the insurer to determine when the contamination occurred. Other states may have similar programs.
    • Most homeowner insurance policies appear to exclude coverage for soil contamination. Exceptions may exist in cases where the oil plume has entered a neighboring property and created a 'third party liability'.

  • Most oil tanks will have some surface contamination around the fill pipe. This is usually the result of small spills during oil delivery. These small spills are likely not to be a major concern. The greater concern is related to the contamination from leaks from the tank and/or the lines leading to the house. In order to detect contamination from such leaks, soil cores have to be taken from areas around and below the bottom of the tank. Soil testing costs range from $150 to $500.

    The standard method of testing involves measuring the depth to the bottom of the tank. Once this depth is established, a hole is drilled in the ground next to the tank and away from the likely location of the oil lines. A sample of soil is removed from the bottom of the hole for laboratory testing. Oil contaminated soil will often have a gray color and a strong odor.

    Clean soil will test at less then 20 parts per million (ppm) of oil. However, test results between 20 and 200ppm may be an indicator of higher contamination levels at another location. Test results of less than 20 ppm are good news, but only prove that the soil at this specific location was clean. It is therefore very important to have the test sample taken by a skilled professional who will locate the most likely area(s) for any contamination.

    Clean up levels depend upon the local jurisdiction. Arnie Sugar, P.G. of HWA GeoSciences Inc. was kind enough to help out with the rules in Washington State: "The new (since 2001) Washington State Department of Ecology (not EPA) 'Method A' cleanup level for heating oil TPH is 2,000 mg/kg (ppm). It went up by a factor of 10, as it became known that the heavier hydrocarbons (including heating oil) have relatively low toxicity and mobility."

  • The cleanup of an oil spill can be a minor project, involving the removal of a few buckets of contaminated soil, or a major excavation project costing tens of thousands of dollars. There are two options for the mitigation of the contaminated soil: disposal at a landfill and baking.

    Disposal is slightly less expensive but may have a long term liability if the landfill requires future cleanup. Landfills must keep a record of the source of the disposed material. Any future pollution and cleanup could become the responsibility of the original owner of the contaminated material.

    Baking the soil involves the heating of the soil and burning off the oils in the soil. Once this is done, the soil can be returned to the site. The baking option appears to be the safer method.

    There are also some experimental methods to treat the contaminated soil with oil eating bacteria. However, most of these methods require exposing the soil to air and oxygen, and as such, are impractical in residential settings.

  • The most popular alternative to oil heat is natural gas. Natural gas appears to be less expensive than oil as a heating fuel. But there are many factors to consider:

    • A good quality, annually maintained, existing oil furnace may cost a little more to operate, but does not require the capital outlay of a new gas furnace. There is a popular misconception that oil heat is 'dirty' and gas heat is 'clean'. However, a good quality and well maintained furnace does not introduce any combustion by-products into the heated area - no matter what the fuel.
    • Natural gas does not require a tank and the combustion by-products are arguably less polluting to the outdoor air.
    • By bringing in natural gas or propane to the house, some of the existing load on a small electrical service can be reduced. That is, a 100 amp electrical service may be all you need in a larger home if you use gas for the heating of the air and water, cooking and the drying of clothes. As a result, it may be possible to save on electrical upgrades by bringing gas to the house.
    • Gas hot water heaters, and most fireplace inserts