Here's the error message :
Oracle/OCI libraries could not be loaded: libclntsh.so.10.1: cannot open shared object file: No such file or directory - /usr/local/lib/ruby/site_ruby/1.8/x86_64-linux/oci8lib.so
When deploying the Rails app from mongrel, the app runs fine. But the app can't seem to connect to the oracle db when it is deployed via Phusion Passenger because it can't load the libclntsh.so.10.1 library. Googling for that error message brought us to a number of solutions and most of them has something to do with setting and exporting the $LD_LIBRARY_PATH from... well almost anywhere it can be set/exported to/from, which includes : a ruby wrapper, somewhere in environment.rb, inside the httpd.conf but none of them seems to fix the problem. We're kinda stumped here because we are can't really identify what's causing this problem.
These two articles talk about deployment of Phusion Passenger + Rails + Oracle:
Make sure the path to Oracle Instant Client or Oracle Full Client libraries is added to LD_LIBRARY_PATH and the user running Apache has right access to it.