Mariner Energy Responsible for the Gulfs Latest Oil Scare

The recent oil rig accident at a Mariner Energy (ME) oil production platform off Louisiana in the Gulf of Mexico sent shock waves through Gulf Coast residents and others still dealing with the aftermath of April's deadly oil rig accident and massive oil spill at BP's Deepwater Horizon drilling rig. Relief was widespread as well when news came that the crew on the Mariner platform was safe, and no oil spill was reported. But it has also brought unexpected, and perhaps unwelcome, focus on Houston-based Mariner Energy.

The company describes itself as "one of the leading independent oil and gas exploration and production companies located in the Gulf of Mexico," with about 85% of its production coming from offshore facilities -- including a growing number of deep-water developments. Mariner's Vermilion 380 platform, the site of Thursday's oil rig accident is reportedly operating in about 350 feet of water, a depth considered shallow by industry standards.

Tainted by Enron

Mariner was owned by another Houston company -- Enron Corp. But Enron's collapse following a corruption scandal in late 2001 left Mariner in limbo. According to the Houston Chronicle, "the taint of Enron's collapse made it difficult for the firm to get access to financing for several years."

ACON Investments bought out Mariner from an Enron affiliate several years later, with the approval of the U.S. Bankruptcy Court, for $271 million in 2004 -- and the company went public in 2006. Several of Mariner's senior officers, including President, Chairman and CEO Scott Josey, are former Enron executives.

Mariner remained a midsized oil company that's not very well known outside of the industry. It made some headlines this past April when Apache Corp. (APA) announced a merger agreement with Mariner for about $2.7 billion in cash and stock, including $1.2 billion in debt. At the time, Apache's chairman and CEO said Mariner "provides an exciting new platform for growth in the deep water and complements our strengths in the Gulf Shelf and the Permian Basin."

But the deal has not been finalized, and Apache -- which recently bought $7 billion of North American and Egyptian assets from BP -- is reportedly monitoring the Mariner oil rig accident closely.

A Spotty  Record

Even before that accident, Mariner had come under scrutiny for other safety issues. The Los Angeles Times, quoting federal officials, says there have been over a dozen accidents at Mariner's Gulf of Mexico offshore facilities in the past four years, "including at least four fires and a well blowout." According to the Times, Mariner also paid $55,000 in fines for safety violations this summer. But the article also points out that, looking at the overall oil industry, Mariner's safety record is not the worst.


"The [industry] standards are much stronger than what you might see from even 20 or 30 years ago," says Dr. Alfred Eustes, associate professor at the Colorado School of Mines' Petroleum Engineering Department . "It's remarkable to me, every time I go out to visit various sites, the level of effort that's being put into safety, health and environment. We're living and breathing and eating it. It's one of those kinds of things that we're incorporating into the academic community."

The Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement is investigating this latest Mariner oil rig accident, "to ensure that we find out what happened, how it happened, and what kind of enforcement action should be taken if any laws or regulations were violated."