I agree that any containment structure built out of wood, would only result in more projectiles...
A well constructed concrete structure with three walls so that the energy would be focused in one direction might work but that kind of hassle makes a new tank a more viable option, IMHO.
That being said, I was a licensed air compressor supervisor in NYC (yes it's required there) for almost 20 years. Our shop had 2 compressors with 3 tanks, one of them ancient. We had the tanks hydrostatic tested roughly every three years. The technician that preformed the tests would fill the tanks with water then hook them up to a tank of nitrogen, pressurize to 300 psi and wait 30 minutes. He'd calmly stand right next to the tanks while doing the test saying that when they go they just make a little pop and the water gushes out, and that was extremely rare.