In a report to the Cromwell Community Board, Central Otago District Council property manager Mike Kerr recommends the board approve an overspend of $60,000 to cover costs of the tank's removal, replacement, and a site clean.
The diesel kept in the tank was used to heat the hall.
Speaking to the Otago Daily Times yesterday, Mr Kerr said he could only guess how much contaminated soil would have to be removed from the site, which is near Lake Dunstan.
He hoped $60,000 would be enough, although it would depend on results of soil tests once the underground tank was removed.
The cost estimate included about $10,000 for the cost of pumping out any remaining fuel, removal and disposing of contaminated soil, reinstatement of soil and site earthworks, and disposal of the underground tank.
Mr Kerr said more funding could be needed if large amounts of contaminated soil had to be removed and replaced.
"My hope is I don't have to go back to the board for more money, but we won't know the extent of contamination until the tests are done," he said.
Board chairman Neil Gillespie said the board had been aware of the situation since the first 500 litres of diesel disappeared in April.
At the time it was thought to have been stolen so the board contacted police and put a lock on the tank.
Another 500 litres was put into the tank and disappeared almost immediately, after which engineers did a pressure test and confirmed a leak.
Mr Gillespie said the site had not been disturbed since a temporary tank was installed above ground to cater for hall users throughout winter.
"We've done all the right things in terms of notifying the Otago Regional Council and other authorities," he said.
But Mr Kerr's report stated the temporary tank did not comply with regulations, and he recommended the installation of a third tank rather than compliance.
The above-ground tank was not constructed by an approved fabricator and did not have a compliance plate, stationary containment certificate, dipstick, venting, required signs, or vehicle protection bollards, he said.
Mr Kerr's report will be considered at the board's next meeting in Cromwell on Monday.
