Official verdict- something broke in the lower part of the engine and caused it to leak all of it's oil to somewhere. Options offered:
1. Used engine- pulled from a salvage yard, comes with a 12-month, 12,000 mile warranty= $5670.66 (parts and labor)
2. Remanufactured engine- 3-year, unlimited mileage warranty= $6983.41
The car has 81,000 miles on it.
Mechanic said that he's seen at least 7 other 2006 Escapes do this. They reach 80,000 miles and break down, with no warning lights. He said he has two parked in the backlot where people just walked away from them.
I would not go with option 1. My struggle now is do I pay more than my car is worth on a remanufactured engine and cross my fingers that nothing else goes?