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updated 7/8/2010 7:28:22 PM ET 2010-07-08T23:28:22

The Obama administration lost an attempt Thursday to keep a temporary moratorium on deepwater oil drilling in place while it appeals a court ruling against the six-month ban.

The administration had asked the 5th Circuit Court of Appeals, based in New Orleans, to stay a lower-court ruling until a full hearing on the moratorium was heard. But the appeals court found that the Interior Department failed to show the federal government would suffer "irreparable injury."

In the lower court ruling last month, a federal judge, also in New Orleans, lifted the moratorium after Hornbeck Offshore Services Inc. argued it was arbitrary because it was a blanket ban on all new drilling in depths below 500 feet.

The Obama administration appealed, saying the suspension was needed to give time to investigate the cause of the BP blowout and ensure other drilling rigs operate safely.

The U.S. Energy Information Administration said the ban would reduce crude output by an average of 82,000 barrels a day, more than previously estimated.

The appeals court set arguments on the government's appeal seeking to reinstate the original moratorium order for the week of Aug. 30.

Also Thursday, the head of BP's Gulf Coast restoration unit, Bob Dudley, told NBC and the Wall Street Journal in separate interviews that it could be possible to stop the well before the mid-August date that had been widely discussed.

"In a perfect world with no interruptions, it is possible to be ready to stop the well between July 20 and July 27," Dudley told the Wall Street Journal.

A BP spokeswoman later clarified his comments, saying that "the expectation is that it will be August" before a relief well will be ready to stop the blowout, and that Dudley was providing "the very, very best scenario if everything went absolutely superbly according to plan."

National Incident Commander Thad Allen said Thursday that the relief well is expected intercept and penetrate the Deepwater Horizon well pipe about 18,000 feet below sea level within seven to 10 days.

But he said they won't know how long it will take to stop the oil until they get there. The gushing well has several rings, and oil could be coming up through multiple rings.

The plan is to pump heavy mud and then cement into the well to overcome the upward pressure of the huge oil reservoir below.

If the oil is coming through the outer ring of the well, then they will have to pump in mud and cement to stop that layer first. Then they would have to drill through the hardened cement and repeat the process in each ring until they reach the center pipe and do it again.

That scenario would push into the middle of August, which is the timeline the company and government officials have held to for weeks.

"If you have to exhaust all means for the ways that hydrocarbons are coming up the pipe, then that puts you into middle August," Allen said.

If the oil is only coming up the center pipe, then it's possible to stop the leak sooner.

The relief well is currently the best hope for stanching the oil leak sparked by the April 20 explosion aboard the Deepwater Horizon drilling rig, which killed 11 workers and began an environmental catastrophe for the region.

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Shaving even days off the mid-August timeline would stop millions of gallons of oil from escaping into the Gulf. The broken well has spewed between 86 and 169 million gallons of oil, according to federal estimates. That's enough oil to fill about 3.4 million standard bathtubs.

A new collection vessel that should more than double BP's oil-capture capacity to 53,000 barrels a day from around 25,000 is projected to take three more days to hook up, as rough seas hamper efforts to finish the job.

Reuters and The Associated Press contributed to this report.

Video: Allen: BP needs to 'under promise and over deliver'

  1. Transcript of: Allen: BP needs to 'under promise and over deliver'

    BRIAN WILLIAMS, anchor: And we turn again now to the mess in the gulf on day 80. Here's where we are. Oil has now come ashore along 507 miles of coastline in all five gulf states , and there's oil now north of New Orleans . The primary relief well, one of two of them, said to be the best hope of stopping the leak, is now, quote, "within a couple hundred feet" of the gusher. BP says that, in a perfect world, they could be, quote, "ready to stop the well between July 20th and July 27th ." That, by the way, would be day 99 of this mess. Just how they do that in a moment, but let's start with our chief environmental affairs correspondent Anne Thompson , who remains in Venice , Louisiana . Anne , good evening.

    ANNE THOMPSON reporting: Good evening, Brian . There has been nothing perfect in this story. And after a week and a half of battling Mother Nature and the oil, there is a break in the weather . And today federal officials demanded BP come up with a plan to take advantage of this lull between storms. With clearing skies and calming seas, BP 's prediction that it could kill the gushing well by July 27th , the same day it reports second quarter earnings, today did not win the endorsement of the government's man in charge.

    Admiral THAD ALLEN, Retired (National Incident Commander): I've been around you folks long enough to know that we need to underpromise and overdeliver. So Allen is at August.

    THOMPSON: Today Allen gave BP 24 hours to come up with a timeline for action, specifically to see if it could get the helix producer online to capture an additional 25,000 barrels of oil a day from the leaking well while replacing the current containment cap with a better fitting one.

    Adm. ALLEN: There is a particularly good weather window in the next seven, 10 -- to 10 days to try and accomplish change out of the containment cap.

    THOMPSON: The newest weapon to fight the oil is an old technology. The Navy blimp able to stay aloft longer than other aircraft will help spot the path of the oil. Across the Gulf Coast , thousands of workers in five states continue the tedious and costly work of cleaning tar balls from beaches. But some scientists question if all this effort is worth it.

    Mr. GEORGE CROZIER (Dauphin Island Sea Lab Executive Director): Once it's under an inch of sand or six inches of sand, it will presumably continue to biodegrade. It may take a longer time, but the inhabitants of the beach that are there on a regular time frame are not the most critical in the ecosystem.

    THOMPSON: The tides that carry the oil in also bury it in the sand. The bigger and stronger the waves, the deeper the oil sinks in. The exception: Louisiana's Grand Isle. This beach is closest to the spill site. Scientists say the oil that washes ashore here could be fresher and potentially more toxic. But at Florida 's Pensacola Beach , where beauty draws tourists and their money, looks matter.

    Mr. BUCK LEE (Santa Rosa Island Authority): If they ever stop that gusher out in the gulf and if they ever get enough skimmers to stop it coming ashore, then we're going to come in here and we're going to sift down about eight inches.

    THOMPSON: Hoping to dig deep enough to remove the scars left by this summer of oil.


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