You don't want to "drill" a 1" hole in 3mm sheet. Without support the edge would be ragged and other problems would occur, such as fragments dropping into the tank.
The best approach is probably to use an annular grinder. They are used for putting holes in tile and glass. Search for "diamond hole saw" on Amazon. Use a lot of water to cool it and the slowest setting on the drill. Take a lot of breaks to avoid heat build up. As long as you are using a stream of water to flush the cutting area, no significant amount of metal dust will get into the tank.
The main problem is the chance that the slug could fall into the tank after you cut through. If the surface of the tank is curved, you will not break through all at once, so you just grind until there is only a little bit of connecting metal left, then grasp the cutout with a pliers and work it loose. File to smooth.
If the surface of the tank is flat, then avoid breaking through by cutting 90% of the way through, then bevel the saw (tilt it a little). This will cause it to go through one side first. So you just gradually adjust the tilt, cutting through more and more until you can work the cutout loose with pliers.
Don't worry about small amounts of metal filings in the tank, thats what fuel filters are for. If you attach a neodymium magnet to a cable or rod (STRONGLY) and drag it around the bottom of the tank you will find it picks up all kinds of metallic fragments and junk.