Oil rig catches fire in gulf; leak unlikely
Friday, September 3, 2010
An oil and gas production platform in the Gulf of Mexico caught fire Thursday morning, reigniting the political debate over the safety of offshore wells.
The fire began near an oil storage tank on top of the platform about 80 miles south of Vermilion Bay, La., while 13 workers were painting and water-blasting, forcing them to evacuate as flames engulfed the facility, according to Mariner Energy, the platform operator.
A dozen of the workers were able to don brightly colored survival gear known as "Gumby suits." Clinging together in the water for two hours, they drifted about a mile before they were rescued by the Crystal Clear, a supply vessel that rushed over from a rig about 25 miles away. The blaze was extinguished in the late afternoon.
It did not appear that the fire triggered a crude oil leak like the one that occurred after the April 20 blowout of BP's Macondo well. That blowout, about 200 miles east of the Mariner platform, caused the worst oil spill in U.S. history and has forced BP to set aside billions to clean up the environmental damage and compensate gulf businesses and residents.
A Coast Guard official initially said that Mariner Energy, which has a history of fires and safety violations, reported an oil sheen 100 feet wide and a mile long. But Patrick Cassidy, director of investor relations for the company, later said that automated equipment on the platform had shut down its seven producing wells and that "in an initial flyover of the facility, no oil sheen was seen on the water." Over the past week, the platform, in the Vermilion block 380, had been producing 1,400 barrels a day of crude oil and 9.2 million cubic feet a day of natural gas.
Nonetheless, with the Gulf Coast still reeling from the massive BP spill, the fire brought new calls for tougher regulation just as the oil industry and the White House were hoping that public concerns would abate.
House Energy and Commerce Chairman Henry A. Waxman (Calif.) and two other top Democrats on the committee sent a letter to Mariner Energy chief executive Scott D. Josey demanding a briefing by Sept. 10. Rep. Edward J. Markey (D-Mass.) issued a statement saying the incident shows "that much is left to be done to keep America's workers and waters safe from those risks."
The Mariner Energy fire also occurred as the oil industry has been battling to stop tougher regulations in the wake of the BP accident. The American Petroleum Institute is planning to hold rallies nationwide next week to urge the Obama administration to lift its moratorium on deep-water drilling and to pressure Congress to back away from new tax and liability measures.
Oil industry executives stressed the differences between the new incident and the BP blowout, but the differences also underline the magnitude of regulating the industry.
The blowout that sank the Deepwater Horizon drilling rig on April 20 occurred at the bottom of an exploration well in water a mile deep. Thursday's fire began on top of a production platform in about 320 feet of water. There are just under three dozen deep-water exploration rigs in the Gulf of Mexico but thousands of shallow-water production wells.
The timing of the fire overshadowed positive developments on Thursday related to the BP spill. The National Oceanic and Atmospheric Administration reopened 5,130 square miles of fisheries. NOAA administrator Jane Lubchenco said it was "another signal to tourists that the northern gulf is open for business."
Separately, BP removed the capping stack on the Macondo well, a prerequisite for retrieving the blowout preventer that failed.
Like the BP well, the Mariner Energy platform was staffed almost exclusively by workers from oil service firms. Mariner's Cassidy said that only one of the 13 was a Mariner employee.
Unlike BP, Mariner is a relatively small, independent oil and gas company. Once part of Enron, it was caught up in the financial scandal that sent Enron into bankruptcy in 2001. A group of private equity firms led by Acon, a firm with offices in Washington, bought Mariner in March 2004 and took it public later.
The company has been exploring in the gulf since 1996, and at the end of 2009 had interests in nearly 350 federal offshore leases, with more than 110 of those in development. The company has participated in more than 35 deep-water projects. It effectively doubled the size of its operations in 2006, when it acquired Forest Oil, including the Vermilion field.
In April, Apache Energy agreed to acquire Mariner, whose shares then more than doubled. The acquisition has not been completed. On Thursday, Mariner shares fell 60 cents, or 2.57 percent, to $22.75 a share on a day when the broader stock market rose.
According to Bloomberg News, the largest shareholder is John Paulson, a hedge fund manager known for shorting subprime mortgage derivatives through Goldman Sachs before the housing market collapse. He owned 9.7 percent of the firm at the end of June.
In its 2008 annual report, Mariner said that the Vermilion 380 field was its largest in the gulf's Outer Continental Shelf. The platform was damaged by Hurricane Ike in 2008 and production was shut down for most of 2009. Thursday's fire is a new setback.
"We saw the fire from 20 miles away, smoke from it," said Dan Shaw, captain of the Crystal Clear supply boat that rescued the platform workers.
As they got closer, the boat's four-man crew saw a Coast Guard helicopter hovering over the 13 workers, a few of whom waved. Shaw said that 12 were wearing survival suits. They stayed in a pack and helped the one man without a suit.
Shaw said his boat pulled alongside the group, in three-foot swells ("a little bit lumpy," he said), and a crewman hauled the 13 aboard one by one. They were dropped off at another rig about seven miles away, where they were picked up by helicopters for the trip to land.
"They were pretty calm. They were pretty tired, though. They'd been treading water for a couple hours," Shaw said, speaking by satellite phone from the boat.