Generators

What were the protection devices on the generator?

The Earth fault protection should have activated.

What is the nature of the damage? What test failure? Oil contamination causes deterioration/breakdown of insulation.

Opening the ACB wouldn't stop the damage, it would just stop any parallel back feeds causing more damage. The engine and excitation needed to stop.

You are looking in the wrong direction; It is the level or flow sensers in the bering oil circulating system which did not not warn appropriately, so trace that out.

Has the Operators being monitoring the bearing temperature, Deviation from normal operating temperature would have given clue to a vigilant Operator.

Bearing oil is insulator so rotor earh fault cannot be sensed by the rotor relay, Other protections like Differential and Interturn will operate only when winding has been dammaged.

Most oils contain traces of sulphur. (remember the bad smell of burned oil in a gear)

When an electrical winding is covered with oil and this winding is at normal operating temperature (+/- 80 ° Celsius), the sulphur destroys the insulation of the cupper wires.

It is a process that takes several months before there is a break down in isolation.

But finally the windings will get in short circuit.

Mostly the coils have changed colour at the places that where immersed in oil.

Solution, they sell lubricants with no sulphur, they are used in conveyer motors, and hermetic sealed compressor motors.

Please furnish further details about the protection scheme used for the generator. Also give the details of type of winding insulation. As rightly stated in one of the comments, oil is also a type of insulation. But in case of open circuit ventilation of the generator, lot of dust, carbon particles and other contaminants enter the generator and penetrate into the insulation (unless it is epoxy insulation) and provides tracking paths to earth, other phases and/ or to turns of the same phase. If inter turn short protection is not provided then any short between turns would result in circulating current and then in charring of coil insulation.

You have not indicated how much of oil has entered in the generator. If the terminal housing is flooded, then phase to phase, 3phase short or earth fault can also take place. Normally bottom of the generator casing is given some slop such that any liquid entering the generator gets collected there and a liquid detector gives an alarm. Whether such an arrangement exits in your generator?

May be I can further analyze it if details as asked above are given