Open the drain on the heating oil tank with your pipe wrench and allow leftover oil in the tank into the five-gallon bucket. Close the drain and empty the bucket into the 55-gallon drum as necessary. Allow all of the oil to drain from the tank.
Disconnect all of the pipes from the tank with your pipe wrench. Remove one full section of pipe, wrap the threads of the remaining pipe with plumber's tape and tighten a pipe cap onto the end of the pipe to prevent leaking oil from draining out of the system and onto the floor.
Cut a hole through the side of the tank with your drill and hole saw attachment. Cut away pieces of metal from the tank with the nibbler. Work slowly and methodically to trim away manageable sections of metal to completely disassemble the tank.
Scoop away any leftover sludge from the tank with your shovel and place it into the barrel. The oil and sludge in your barrel go to an oil recycling center while the metal goes to the scrap yard for recycling.