Oil gushing into Gulf after problem with cap

NEW ORLEANS According to /*Coast Guard Adm. Thad Allen*/, when the robot bumped the system, gas rose through the vent that carries warm water down to prevent ice-like crystals from forming in the cap.

The oil giant was forced to remove the cap and crews were checking to see if crystals had formed before putting it back on. Allen did not say how long that might take.

"There's more coming up than there had been, but it's not a totally unconstrained discharge," Allen said.

In the meantime, a different system was still burning oil on the surface.

Before the problem with the containment cap, it had collected about 700,000 gallons of oil in the previous 24 hours. Another 438,000 gallons was burned.

Meanwhile, the Obama administration tried to sort out how to resurrect a six-month moratorium on new deepwater drilling that was struck down by a federal judge a day earlier.

/*U.S. District Judge Martin Feldman*/ overturned the ban Tuesday, saying the government simply assumed that because one rig exploded, the others pose an imminent danger, too.

/*The White House*/ promised an immediate appeal.

The Interior Department said it imposed the moratorium so it could study the risks of deepwater drilling. But the lawsuit filed by /*Hornbeck Offshore Services*/ of Covington, La., claimed there was no proof the other operations posed a threat.

The moratorium was imposed after the April 20 explosion on the /*Deepwater Horizon*/ drilling rig that killed 11 workers and blew out the well that has spewed millions of gallons of oil into the Gulf.

In a statement late Tuesday /*Interior Secretary Ken Salazar*/ said, that within the next few days he would issue a new order imposing a moratorium that eliminates any doubt it is needed and appropriate.

Feldman has reported owning less than $15,000 in stock in 2008 in /*Transocean Ltd*/.

His 2008 financial disclosure report - the most recent available - also showed investments in Ocean Energy, a Houston-based company, as well as Quicksilver Resources, Prospect Energy, Peabody Energy, Halliburton, Pengrowth Energy Trust, Atlas Energy Resources, Parker Drilling and others. Halliburton was also involved in the doomed Deepwater Horizon project.

BP said Wednesday that managing director Bob Dudley will head the new Gulf Coast Restoration Organization, which is in charge of cleaning up the oil spill. Dudley won't say if the oil giant will resume deepwater drilling in the Gulf, where it's the largest oil and gas producer.

Dudley says the company will "step back" from the issue while investigating the April 20 explosion.

Latest Developments:

  • Earlier in the day, executives at a major oil conference in London warned that the moratorium would cripple world energy supplies. Steven Newman, president and CEO of Transocean, called it unnecessary and an overreaction.
  • In London, British Prime Minister David Cameron's office said he would discuss BP and the oil spill in a meeting Saturday with President Obama. Cameron's spokesman Steve Field told reporters Wednesday the men will discuss the beleaguered energy company during a meeting during the G-8 and G-20 summits in Canada.
  • BP stock dropped 81 cents Tuesday, or 2.7 percent, to $29.52, near a 14-year low for the company in U.S. trading. The stocks of other companies associated with the spill remained low despite Feldman's ruling.

The Associated Press contributed to this story.

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