There was still liquid petroleum gas in the 19-mile pipeline and authorities were waiting for it to burn out, Coast Guard Petty Officer Alex Washington said.
Coast Guard Ensign Tanner Stiehl said the collision happened Tuesday at about 6 p.m. CDT on Bayou Perot, in a marshy area near where Lafourche and Jefferson parishes meet, about 30 miles south of New Orleans.
The tugboat and barge were engulfed in flames and heavy smoke billowed from the scene.
"All crew members were able to exit the tug; the captain reportedly suffered second to third-degree degree burns," the Coast Guard said in a news release early Wednesday.
Stiehl said the barge was carrying oil and "there have been reports of oil in the water." Washington said authorities were waiting until daylight to get an idea of how much oil had leaked from the barge.
The barge was holding 92,000 gallons of crude oil, the Coast Guard said. The tug boat had 1,000 gallons of diesel fuel.
Officials say the tug's captain was transferred to the burn center at Baton Rouge General Hospital.
Stiehl said the pipeline, which was in shallow water, is owned by San Ramon, Calif.-based Chevron. He said the company has isolated the pipeline from other mains, "so only whatever was in the pipeline will be able to burn."
Jefferson Parish Councilman Chris Roberts, who represents the area, said the fire was in very shallow water, as little as a foot deep, and authorities would not approach the site until the fire had burned itself out.
Stiehl identified the 47-foot tug boat as the Shanon E. Settoon. Settoon Towing of Pierre Part, La., lists the tug boat among its vessels on its website.
The Coast Guard said ES&H has been hired to handle the oil spill response.
It was not immediately known who owns the 154-foot oil barge.
The area is thinly populated and no evacuations have been ordered.
"We are aggressively responding with our state and local partners to mitigate the fire and prevent any potential impacts from oil that entered the water," Coast Guard Cmdr. Russ Bowen said in a news release.
The area is along the northern reaches of Barataria Bay, which was heavily affected by oil from the BP spill in 2010. It is mostly small communities where people often make their living from the sea, either working in the oil and gas industry or as fishermen.
The 92,000 gallons the Coast Guard says was being carried by the barge is a fraction of the millions of gallons that spewed into the Gulf of Mexico during the 2010 spill.
The region where the fire was burning is criss-crossed by pipelines and wellheads are a common sight in the shallow waters of the bayou and bay shoreline.
Bayou Perot was the scene of an explosion and fire on a specialized oil rig in December 2010 in which three men were injured. The explosion happened while the men were welding and there was no pollution, the Coast Guard reported.