I would say it would work as long as you gave it a good wash out with dawn and burn it out real well. It really isn't any different than using a fuel oil tank or propane.
I've welded on them Filled with water or Co2. I'm always a little nervous about them. My Dad Blew up a truck and lived to tell about it. He was told to weld mounting ears on the "new water truck", No one mentioned it was and old diesel tank!! he woke up next to a building. Only lost some hearing in one ear.