Mariner Energy Platform Explodes in Gulf of Mexico

A fire on a Mariner Energy Inc. oil and natural-gas platform in the Gulf of Mexico has been extinguished in an event that may prolong the U.S. drilling moratorium imposed after BP Plc’s record crude spill.

The fire was put out at approximately 3:30 p.m. local time, and U.S. Coast Guard vessels and aircraft are scanning the sea around the platform to detect any signs of oil, Coast Guard Captain Peter Troedsson said today at a press conference in New Orleans.

All 13 workers were rescued by an offshore supply vessel and were transported to shore from a platform 90 miles (145 kilometers) off the Louisiana coast, Troedsson said. No injuries were reported, he said.

Mariner, which agreed in April to be acquired by Apache Corp., tumbled as much as 16 percent in New York trading in the hours after the accident.

The incident on the platform was a fire on or near upper- deck living quarters, which were unoccupied, and not an explosion, Patrick Cassidy, a spokesman for Mariner Energy, said in an e-mail. The event was reported as an explosion this morning, said Petty Officer Casey Ranel of the U.S. Coast Guard.

Dashed Hopes?

The incident may dash oil-industry efforts to resume deep- water exploration less than five months after a rig explosion killed 11 workers and triggered the biggest offshore oil spill in U.S. history, said Gianna Bern, president of Brookshire Advisory & Research Inc. The Mariner fire involves a platform, not a rig, and is in water 15 times shallower than the site of the BP well that caused the record spill.

Photographer: Mario Tama/Getty Images

Boats spray water on a Mariner Energy Inc. oil and natural-gas platform after it exploded in the Gulf of Mexico. Close

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Photographer: Mario Tama/Getty Images

Boats spray water on a Mariner Energy Inc. oil and natural-gas platform after it exploded in the Gulf of Mexico.

“This incident will increase pressure on the federal government to prolong the moratorium,” said Bern, a former BP crude trader whose Flossmoor, Illinois, firm provides risk- management advice to oil producers. “I don’t think it’s going to matter much to regulators that this wasn’t a deep-water installation and that nobody got hurt. Scrutiny of the whole industry will intensify.”

A mile-long (1.6-kilometer), 100-foot-wide (30-meter) sheen of oil was sighted near the burning Vermilion 380 platform, which stands in less than 400 feet of water, the Coast Guard said earlier today, citing a report from Houston-based Mariner.

Dispatching fire-fighting boats and other response vessels to the Mariner incident won’t interfere with efforts to permanently plug BP’s Macondo well, about 200 miles to the east, Louisiana Governor Bobby Jindal said in a televised meeting with reporters.

Oil Rises

The Vermillion 380 field is less than one-ninth the size of London-based BP’s Macondo discovery.

Oil and gas futures rose on concern the incident will prompt a federal crackdown on offshore production. The Gulf supplies 30 percent of domestic oil output and 13 percent of U.S. gas production.

Production platforms tend to be less prone to blowouts or spills than drilling rigs because they’re tapping into geological formations that have already been tamed with steel piping, concrete and pressure-control devices, said Arthur Berman, a consultant and geologist who lives near Houston.

Rigs drill into unexplored layers of rock, salt and sand laced with pockets of high-pressure, explosive gas. The only thing drillers have to hold unexpected pressure surges at bay are heavy drilling fluid and a stack of valves on the seafloor, Berman said.

Apache Deal

Lee Hunt, president of the International Association of Drilling Contractors in Houston, said the differences between the BP and Mariner incidents won’t prevent the latest fire from “fueling the passions” of people who oppose oil exploration.

“I think we’re very close to restoring some imagery of the safety of drilling operations, and now we have an event that points to the production operations,” Hunt said. “It’s just a different set of circumstances. One’s an automobile and one’s a truck.

Apache intends to proceed with its $2.4 billion acquisition of Mariner, said Bill Mintz, a spokesman for the Houston-based buyer. The cash-and-stock deal was announced five days before BP’s April 20 rig explosion.

Mariner operates seven wells in the Vermilion 380 field. Proved reserves were estimated at 33.2 billion cubic feet of gas equivalent at the end of 2009 and were about 47 percent oil and 53 percent gas and gas liquids. Production last year was equivalent to 1.1 billion cubic feet of gas, Mariner said in a public filing.

Shares Fall

Mariner dropped 60 cents, or 2.6 percent, $22.75 as of the 4 p.m. close of New York composite trading after trading as low as $19.62 earlier today. The stock had more than doubled in value this year before today. Apache, the largest independent U.S. oil and gas producer, fell 1.3 percent to $91.30.

BP lost more than half its market value in the weeks after the explosion aboard Transocean Ltd.’s Deepwater Horizon rig, which the oil producer leased to drill Macondo.

Crude oil for October delivery rose $1.08, or 1.5 percent, to $74.99 a barrel after declining as much as 1.1 percent before the Mariner event. Gas futures climbed 1.2 percent.

Bristow Group Inc., a helicopter company that shuttles workers and equipment to offshore rigs and platforms, spotted the fire during a routine flight earlier today, Kade Monlezun, a manager at the Houston-based company, said in a telephone interview. Bristow immediately alerted the Coast Guard and Mariner to the fire, he said.

The rescued workers will be transported to Terrebonne General Medical Center in Houma, Louisiana, Monlezun said.

The Coast Guard dispatched seven helicopters, two airplanes and four cutters to Mariner’s platform, which began production in 1982, according to the U.S. Bureau of Ocean Energy Management.

To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net; Aaron Clark in New York at aclark27@bloomberg.net.

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