It should be as close to the bottom of the barrel as possible, with the stand leaving you enough room to fill a bucket under it. Use an electric drill. A 3/4th inch hole should be right to fit most hose-compatible spigots. But pick your spigot before you decide what size hole to make!

, Teflon tape is a good choice to make sure your spigot is watertight.
 Screw your spigot into your hole and secure it to the barrel with a properly sized washer. Then seal over the edges around the spigot with waterproof sealant or more teflon tape.
Drill a hole for the spigot.
Wrap tape around the upper threads of the spigot.
Insert the spigot onto the barrel and seal around it.
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