Date: 202103
Local time of day: 0001-0600
Location: ZZZ.Airport, US
Aircraft: A320
Operator: Air Carrier
Operating under: Part 121
Flight plan: IFR
Mission: Passenger
Flight phase: Taxi
ATC / advisory: Tower ZZZ
Aircraft component: Turbine Engine
Component problem: Malfunctioning
Reporter organization: Air Carrier
Reporter function: Captain; Pilot Flying
Reporter qualification: Flight Crew Air Transport Pilot (ATP)
Second reporter function: Pilot Not Flying; First Officer
Anomaly: Aircraft Equipment Problem Critical; Flight Deck / Cabin / Aircraft Event Smoke / Fire / Fumes / Odor
Detector: Person Air Traffic Control; Person Other Person
When detected: Taxi
Result: Air Traffic Control Provided Assistance; Flight Crew Returned To Gate; General Maintenance Action
Contributing factors: Aircraft
Primary problem: Aircraft

Narrative: We were holding short of [the] runway and Tower reported they were seeing smoke coming from our engines but couldn't tell which one. Aircraft behind us immediately reported smoke from the #2 Engine. Tower asked us to taxi clear while I was pulling up the Engine page on the system display. I identified that the oil quantity on #2 Engine was falling rapidly from 8 quarts to 7.5 to 7 to 6.5. At that point; the aircraft behind us reported 'you have flames shooting out #2'. We had no flight deck indications of an engine fire during the entire event. Tower told us to stop where we were and that 'we are rolling the trucks'. I stopped the aircraft and called for the QRC. My FO determined we had a quick action item; ENG 1(2) FIRE (on ground). We ran the checklist which required the discharge of both fire bottles on #2 Engine. I notified the Cabin Crew; then made an announcement to the passengers and stated that we had to shut down the right engine and that we would wait for the emergency equipment to inspect the aircraft. Shortly thereafter; ARFF showed up to the aircraft while simultaneously; I was starting the APU. Upon visual inspection by ARFF; they determined there was still a small residual fire in the #2 Engine. ARFF requested that we shut down of both Engines (#2 was already properly shut down via the QRC). After the APU finished its starting cycle; I shut down the #1 Engine. As the ARFF started their fire suppression on Engine #2; I made another announcement to the passengers that they were doing this as a precaution. The First Officer and I discussed and agreed that if we needed to evacuate; it would be out the left side of the aircraft. When ARFF was finished with their visual inspection and suppression efforts; we were notified to wait for Maintenance to show up for their own inspection. When that was completed; we were told that we would be towed back to the gate. I then made another PA announcement updating the cabin crew and passengers as to what was happening.Everyone involved in this event played a significant part. Both the Tower and the aircraft behind us provided information needed to make necessary decisions due to the fact that we had no indications on the flight deck that a catastrophic engine failure was going to occur. Communication between ARFF and the flight deck was clear and concise; as was the communication with the cabin crew. By following the SOPs that are in place; a positive outcome was achieved. I'm not sure if this type of event can be prevented other than Airbus develop some kind of warning that the engine oil quantity is rapidly decreasing.


Second narrative: [Report narrative contained no additional information]


Synopsis: A320 flight crew reported Tower and another aircraft advised them of smoke coming from #2 engine during their taxi.  Engine was shut down on the taxiway when the crew noted the rapidly falling oil quantity.