Global News

Thursday September 02, 2010

HOUSTON (Reuters) – an oil and gas platform operated by Mariner Energy burst into flames on Thursday and unleashed a mile-long oil sheen into the Gulf of Mexico, in the region's first major offshore disaster since BP's oil spill began in April.

All 13 crew members were rescued with no injuries from the ocean near the burning platform and were taken to another offshore platform, the U.S. Coast Guard said. the fire has been contained but is not yet extinguished.

It is not known whether the oil sheen came from the damaged platform or the well, which is in relatively shallow water at 340 feet deep.

The platform is located more than 90 miles south of Louisiana's Vermilion Bay, west of BP Plc's ruptured Macondo well that killed 11 people and caused the world's worst offshore oil spill.

At the moment, the accident does not appear to be another BP-style disaster, said Raoul LeBlanc, a senior director at PFC Energy in Houston.

"if it's an industrial accident and doesn't involve a well it's obviously still bad, and we hope that no one has been hurt, but it's unlikely to have long-term implications for production in the Gulf of Mexico," LeBlanc said.

The platform was undergoing maintenance and was not in active production, the U.S. Interior Department said. It was authorized to produce oil and natural gas.

Material being stored on the platform -- not oil coming up from the well -- was causing the blaze, which was nearly extinguished, Louisiana Governor Bobby Jindal said.

The seven-well platform's output is a small fraction of the 1.6 million barrels of oil the region produces on a daily basis.

The facility averaged 9.2 million cubic feet of natural gas per day and 1,400 barrels of oil and condensate per day during the last week of August, Mariner said.

White House spokesman Robert Gibbs said he did not know whether the fire would affect the Obama administration's current deepwater drilling moratorium. Environmental groups said the explosion showed the need to keep the moratorium in place.

News of the fire helped push up crude oil prices $1.06, or 1.45 percent, to $74.99 a barrel on the new York Mercantile Exchange. Oil prices were also boosted by Hurricane Earl, which is threatening refineries along the U.S. East Coast.

Shares of Mariner Energy fell 2.4 percent to $22.79 and shares of Apache Corp, which is expected to buy Mariner Energy, also fell 1.8 percent to $90.82.

Mariner has participated in at least 35 deepwater projects in the Gulf and operated over half of them.

Pritchard Capital analyst Stephen Berman said the market over-reacted to the news when it initially pushed Mariner's shares down 5 percent.

"as more details come in, it's an incident. It's unfortunate but it sounds like it's under control," he told Reuters Insider.

(Additional reporting by Kristen Hays, Anna Driver and Eileen O'Grady in Houston, David Sheppard and Joshua Schneyer in new York, and Tom Doggett and Ayesha Rascoe in Washington; writing by Andy Sullivan; editing by Lisa Shumaker)