Following the Dunkirk evacuation in 1940, Britain faced a shortage of weapons. In particular, there was a severe scarcity of anti-tank weapons, many of which had to be left behind in France. One of the few resources not in short supply was petroleum oil since supplies intended for Europe were filling British storage facilities.
Maurice Hankey then a cabinet minister without portfolio, joined the Ministerial Committee on Civil Defence (CDC) chaired by Sir John Anderson, the Secretary of State for the Home Office and Home Security. Among many ideas, Hankey "brought out of his stable a hobby horse which he had ridden very hard in the 1914-18 war – namely the use of burning oil for defensive purposes." Hankey believed that oil should not just be denied to an invader, but used to impede him. Towards the end of June Hankey brought his scheme up at a meeting of the Oil Control Board and produced for Commander-in-Chief Home Forces Edmund Ironside extracts of his paper on experiments with oil in the First World War. On 5 June, Churchill authorised Geoffrey Lloyd, the Secretary for Petroleum to press ahead with experiments with Hankey taking the matter under his general supervision. To this end, the Petroleum Warfare Department (PWD) was created and it was made responsible for developing weapons and tactics. Sir Donald Banks was put in charge of the department.
The PWD soon received the assistance of William Howard Livens. Livens was well known for his First World War invention: the "Livens Gas And Oil Bomb Projector", known more simply as the Livens Projector. The Livens Projector was a large, simple mortar that could throw a projectile containing about 30 pounds (14 kg) of explosives, incendiary oil or, most commonly, poisonous phosgene gas. The great advantage of the Livens Projector was that it was cheap; this allowed hundreds, and on occasions thousands, to be set up and then fired simultaneously catching the enemy by surprise.
One of Livens' PWD demonstrations, probably first seen about mid-July at Dumpton Gap, was particularly promising. A barrel of oil was blown up on the beach; Lloyd was said to have been particularly impressed when he observed a party of high-ranking officers witnessing a test from the top of a cliff making "an instantaneous and precipitate movement to the rear". The work was dangerous; Livens and Banks were experimenting with five-gallon drums in the shingle at Hythe when a short circuit triggered several weapons. By good fortune, the battery of drums where the party was standing failed to go off.
The experiments led to a particularly promising arrangement: a forty-gallon steel drum buried in an earthen bank with just the round front end exposed. At the back of the drum was an explosive which when triggered ruptured the drum and shot a jet of flame about 10 feet (3.0 m) wide and 30 yards (27 m) long. The design was reminiscent of a weapon dating from late medieval times called a fougasse: a hollow in which was placed a barrel of gunpowder covered by rocks, the explosives to be detonated by a fuse at an opportune moment. Livens' new weapon was duly dubbed the flame fougasse. The flame fougasse was demonstrated to Clement Attlee, Maurice Hankey and General Liardet on 20 July 1940.
Experiments with the flame fougasse continued and it rapidly evolved. The fuel mixture was at first 40% petrol and 60% gas-oil, a mixture calculated to be useless as a vehicle fuel. A concoction of tar, lime, and petrol gel known as 5B was also developed. "5B was dark coloured, sticky, smooth paste which burned fiercely for many minutes, stuck easily to anything with which it came in contact and did not flow on burning." Early flame fougasse designs had a complex arrangement of explosive charges: a small one at the front to ignite the fuel and a main charge at the back to throw the fuel forward. An important discovery was that including magnesium alloy turnings (the waste product of machining magnesium pieces in a lathe) with the main charge at the rear of the barrel would give reliable ignition without the necessity of a separate ignition charge and its associated wiring, as magnesium can easily ignite and burns at a very high temperature. The alloy of about 90% magnesium and 10% aluminium was, at the time, known under the trade name Elektron.