I second Kaz’s comment to be wary of an old/used air tank. A leak on a tank of compressed air releases energy for a *very* long time (compared with a leak on a pressurized tank of water). In the power industry, personnel protection barricades are required for a pneumatic pressure test of 100 psi and up, but for a water pressure test, no barricades until 1000 psi.

For a tankless setup to work, the compressor would need at least the same capacity (CFM or CLM (cubic (feet/liters) per minute)), and at the pressure the tool requires. A $45 Harbor freight starter set with a 1/2” drive 230 ft-lb impact wrench requires 4 CFM average at 90 psi. The above-recommended 400 ft-lb unit will require more compressor capacity. Your unit should show the capacity on the label.

As said before, for a compressor with a small volume capacity, the only solution is a tank (the larger the better, or two in parallel). It will take longer to fill, but also longer to lose pressure (from tool use). See http://www.harborfreight.com/cpi/ctaf/Displayitem.taf?itemnumber=55057
for a $22 (US) 7-gallon tank.
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Jim (90 244DL 170K miles)