Scapa Flow has been as an important shipping haven for over 1000 years. The huge natural harbour of Scapa Flow is one of Orkney's distinguishing features. It lies south of the mainland between Stromness and St Mary's Holm, and is protected by the islands of Hoy, Flotta and South Ronaldsay, as well as by a number of smaller islands and skerries.

By 1670 Stromness, already a whaling and fishing centre, became the main European base for the Hudson's Bay Company. By 1854 it had been approved by parliament as the port to which “south mail” arriving at Scrabster in mainland Scotland should be delivered for the Orkney and Shetland islands.

Whilst the first Orkney lighthouse at Dennis Head, North Ronaldsay was built in 1789 as a highly visible warning of the exceedingly treacherous seas and spiteful shorelines in that area of North Ronaldsay, it would be another 60 years before lighthouses began to appear in the sheltered waters of Scapa Flow.  These would be what were known as guiding and leading lights: signposts to calm waters and safe havens.

Range/Leading lights are normally used in pairs, to form a leading line or range, to guide vessels in confined waters. The rear light is located at a suitable distance behind the front light and also above it  and in line with the intended channel centreline. When viewed from right ahead, the light beam of the rear lantern appears directly above the front one. Synchronising the lanterns with a distinctive flash character significantly improves the visibility of the arrangement.

Original notice on how to navigate into Stromness using the lighthouses and their lights as seamarks

The rocks on which the stone tower stands  gained its strange name, not from its shape, or position, as is often the case, but from the annual rent paid on it, by the residents of Orphir (on the Orkney mainland). In return for that barrel of butter, they gained permission from the local laird to hunt the seals which basked upon it.

The tower was originally built in 1853 to support a metal cage similar in style to the drawing on the left (signifying what was known as a port-hand beacon). Since 1980 the beacon has been replaced by an automatic lighthouse to which the 1853 stone tower now lends its height.

On 21 June 1919, the waters between the Barrel of Butter and the Calf of Cava (see below) became filled by many of the scuttled ships of the German Grand Fleet, including the Bayern, Markgraf, Köln, Dresden and König.

The tower was also mistaken - once - for a submarine conning tower and shelled by the British Navy.  Fortunately it has always been an unmanned structure.