A U.S. federal judge has blocked the six-month moratorium on offshore oil drilling, just as more credence is being given to the notion that the Deepwater Horizon disaster has resulted in multiple leaks on the seafloor – due to well casing damage – making containment a munch lengthier process.

New Orleans Judge Martin Feldman made the ruling Tuesday, June 22 to reverse a ban imposed by U.S. President Barack Obama May 27 in response to the massive on-going oil spill in the Gulf of Mexico.

The temporary ban suspended suspended drilling of 33 exploratory wells in the Gulf, with critics saying it would put thousands of oil employees out of work and further devastate the Gulf region’s economy. According to Associated Press coverage, Judge blocks Gulf offshore drilling moratorium:

Several companies that ferry people and supplies and provide other services to offshore drilling rigs asked U.S. District Judge Martin Feldman in New Orleans to overturn the moratorium, arguing it was arbitrarily imposed.

Feldman agreed, saying in his ruling the Interior Department assumed that because one rig failed, all companies and rigs doing deepwater drilling pose an imminent danger.

“The Deepwater Horizon oil spill is an unprecedented, sad, ugly and inhuman disaster,” he wrote. “What seems clear is that the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deepwater drilling activities put us all in a universal threat of irreparable harm.”

The White House has announced that it will appeal the decision. (As an aside, a number of bloggers are today alleging that Judge Feldman “has investments in several companies related to the oil industry” – nevertheless, his decision would have been reached on a legal principle that, essentially, the individual oil companies in that area are innocent until proven guilty.)

Meanwhile, the June 23 edition of the Washington Post is reporting, under the headline Each day, another way to define worst-case for oil spill, how the oil disaster keeps unfolding at a sickening rate as more information becomes available. Or, as writer Joel Achenbach puts it, “even when you think you’ve heard the worst-case scenario, there’s always another that’s even more dire.” While distancing himself from the more alarming case, put by Matt Simmons in various television interviews, they are still given space. Specifically:

The base-line measures of the crisis have steadily worsened. The estimated flow rate keeps rising. The well is like something deranged, stronger than anyone anticipated. BP executives last month said they had a 60 to 70 percent chance of killing it with mud, but the well spit the mud out and kept blowing.

The net effect is that nothing about this well seems crazy anymore. Week by week, the truth of this disaster has drifted toward the stamping ground of the alarmists.

The most disturbing of the worst-case scenarios, one that is unsubstantiated but is driving much of the blog discussion, is that the Deepwater Horizon well has been so badly damaged that it has spawned multiple leaks from the seafloor, making containment impossible and a long-term solution< much more complicated.

Simmons, referred to here as “the unflagging source of end-of-the-world predictions,” gave a public speech outlining his views at the 7th Annual Energy Ocean International Conference, in Ft. Lauderdale, FL, earlier this month. According to a June 8 report on the Maritime Executive:

As a well-known and respected oil industry executive and author of the book Twilight in the Desert: the Coming Saudi Oil Shock and the World Economy, Mr. Simmons drew quite a crowd this afternoon. He spoke about the oil spill in the gulf saying, “It is the greatest human tragedy we’ve ever had. It is our Energy Pearl Harbor.” The oil spill must be attended to with the same “intensity” as was used by the U.S. in WWII after the attack on Pearl Harbor. He says that BP has given us nothing but bad information about this disaster from the very conservative BP report of 1,000 barrels leaking a day to the release of the video that they say is the leaking oil. Simmons claims there is a different source of the leak and the video being released to the media is just a 4-foot oil plume, which is much too small to cause such a massive oil slick.

NOAA ship the “Thomas Jefferson,” a technologically advanced ship used for mapping the ocean floor, has found a 400 foot lake of heavy oil sitting at the ocean floor. Mr. Simmons warned, with so much oil in the gulf (what he believes has been 120,000 barrels a day) a hurricane will spread oil over the entire gulf coast. Matt Simmons doesn’t hide his dislike for BP, calling them one of the worst run companies, who he believes will likely have to file Chapter 11 in the next few weeks. A company so horribly run, it thought they could be “self-insured,” which is a relief to the insurance industry.

Simmons’ earlier comments about the gushing well reaching such a perilous state that it might have to be sealed with a nuclear device was thoroughly dismissed in the item Nukes and Expensive Oil on the Whiskey and Gunpowder site.

Former navy pilot, and peak oil proponent, Byron King, writes that the US government lacks nuclear devices that can operate as such depth. Even if it were otherwise, it would be wrong to assume such a blast would fuse the ocean floor into an area of glass. He continues:

And what of the shock wave? Do we want to rip the seafloor to shreds? Do we want a nuclear-level shock wave traveling through the seafloor in the vicinity of the BP oil well? What will that do? Will it break other oil pipelines installed on the bottom?

Not to mention the contamination,which would travel through the food chain. King concludes the item by bringing the debate back round to peak oil:

I’ll start by making a statement I’ve made before and I’ll make again: the cheap and easy oil is GONE. Finding new energy to fuel our nation is going to be harder, more regulated and more expensive.

Is a U.S. moratorium the right choice? I’ll let you decide that.

But there’s one matter that you won’t have a choice on: the higher price you pay for oil.

With oil sitting north of $70 a barrel I can’t imagine it getting any cheaper.

Indeed, a few years from now we may look back and deem this period the point where the U.S. lost its edge in energy.

(As an aside, bloggers have alleged that Simmons should have declared his interest in BP shares, having supposedly had “a 4,000-share short sale on BP that he picked up when the stock hit $37. That’s in addition to a prior 4,000-share short sale he made at $48 a couple weeks prior.”)

Ultimately, we are left wondering who we can trust. Everyone has an interest, alleged or otherwise. BP has not been honest about the rate of flow from this well, which it initially stated as being 1,000 barrels a day. The US government has not come out and told us about the scope of the disaster. We are left with speculation. And, speculating, it seems fair to say that the failure of BP’s “top kill” operation is consistent with the well casing leaking and oil seeping out from the well, through fissures in the rock, and out to other points along the seabed. Or at least that BP felt that increasing the pressure in the well, to force down oil so it could be sealed, would cause such damage.

According to a June 18 report in the Times-Picayune, headlined BP Cites Broken Disk in ‘Top Kill’ Failure:

In a well of questionable design with a questionable cement job that’s gone through a major explosion, too much pressure on the well, could trigger a rupture, sending oil pushing through fissures in the rock of the ocean floor and bubbling up through the seabed, where it can’t be contained.

That’s why BP abruptly stopped the “top kill” efforts to seal the well May 28 after the company previously had said the procedure would continue for a few more days.
It’s also why the company is continuing with efforts to contain the oil flowing out of the well rather than seal the well outright by adding another blowout preventer on top of the malfunctioning one. It’s also one reason why the containment cap that’s currently capturing oil has vents in the side that allow pressure to escape.

U.S. Coast Guard Admiral Thad Allen acknowledged as much at a briefing Thursday.

Either way, we appear to have one hope – that the relief well operation would allow the well to be filled from the bottom up.

But it’s the lack of information coming from BP and the US government that is causing speculation that the oil reservoir is leaking from various points around the area, and that it will continue for billions of barrels of oil to come. There is speculation that the actual reservoir of oil behind the leak is anything between 2.5 and 500 billion barrels.