By Heri Retnowati

SURABAYA, Indonesia, May 16 (Reuters) - Indonesia is considering a new method involving the construction of dams to brake a torrent of mud that has been gushing from a drilling site on Java island for a year.

Scientists have already dropped hundreds of concrete balls into the mouth of the "mud volcano", but have so far failed to plug the mudflow that has submerged entire villages and displaced 15,000 people in the Sidoarjo area.

Under the new scheme proposed by Japanese scientists, double-walled cofferdams will be built to fence in the mud so it serves as a counterweight to the mudflow, said Sunarso, chairman of a government team tasked with stopping the mudflow.

Details of the method presented to President Susilo Bambang Yudhoyono last week are still sketchy.

"The application of this method is still being studied by a team, including related ministers. We still don't know when it will be carried out," Sunarso told Reuters.

The new scheme to plug the mudflow, which began following an oil-drilling accident last May, is expected to cost 600 billion rupiah ($68.2 million).

The government requires PT Lapindo Brantas, the operator of the well from where the mud has been flowing, to pay for stopping and handling the mudflow as well as compensation for directly affected residents.

The government has agreed to cover costs related to the disaster's social impact on people living outside swamped areas.

Lapindo had been told by the government to pay 3.8 trillion rupiah to victims and for efforts to halt the flow, but officials say the cost could double that.

Lapindo and PT Energi Mega Persada Tbk <ENRG.JK>, which indirectly controls Lapindo, dispute the idea the disaster was caused by the drilling and also whether Lapindo alone should shoulder the cost.

Energi is owned by the Bakrie Group, controlled by the family of Indonesia's chief social welfare minister, Aburizal Bakrie.

Meanwhile one of the scientists behind the concrete ball experiment, Satria Bijaksana, said more concrete balls were needed for better results.

"We can't say we have failed. We asked for more concrete balls but so far there has been no response from the new team handling the mudflow," he told Reuters.

($1=8,794 rupiah)

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