Jakarta/Surabaya – Permanent effects from the huge mudflow engulfing Sidoarjo, East Java, may keep thousands of displaced residents from ever returning to their homes, officials warn.

In a worst-case scenario where the mudflow from the May 29 accident remained unstoppable, residents of Porong district would have to relocate, officials reportedly said during a closed-door presentation Friday organized by the Energy and Mineral Resources Ministry in Surabaya.

The government would allow the inundation of at least seven villages, with a combined population of more than 13,000, to create a huge crater that would shield other areas from the mud, one of those present said.

The mudflow was caused by a drilling accident at the site of Lapindo Brantas Inc. Thousands more people were forced from their homes Thursday after the mud breached an embankment.

The situation was discussed by President Susilo Bambang Yudhoyono, House of Representatives Speaker Agung Laksono, several related ministers, local officials and legislators as well as Lapindo executives. But the President later tersely denied there was a plan to sacrifice the villages.

After the meeting, Agung said the experience of other countries with similar disasters showed even the most advanced technology often was insufficient.

"There is a worst-case scenario that the mudflow could not be stopped. It may stay permanently. The government has several strategies to cope with the situation and ensure that there will be no casualties and economic calamity for the region," he said.

East Java council member Muhammad Mirdasy said the meeting had included a simulation of creating strong barricades encircling the affected area, with a water treatment dam for the mud to be channeled to the sea.

"The construction of the barricades and the dams would cause the loss of at least seven villages that would be permanently inundated by the toxic mud. The total area that would be affected by the plan is estimated to reach more than 350 hectares."

Three of the villages, Mirdasy added, were currently not affected by the mudflow, and were inhabited by middle-income families who owned businesses in the area.

Construction of the facilities, all to be financed by Lapindo, was intended to purify the mud of toxic materials before it flowed into the Porong river, which heads straight into the Madura Strait.

Yudhoyono responded that only uninhabited areas would be used as a mud catchment to remove toxic materials. "There is no plan to inundate seven villages. We will pool the mud in uninhabited areas. There is no such term 'inundation'. We wouldn't have the heart to do that," a clearly annoyed Yudhoyono told a news conference.

However, Vice President Jusuf Kalla said in Jakarta the relocation of residents would be permanent due to the massive scale of the disaster. He said the process would be arranged by the local administration but financed by Lapindo.

"Seeing the swift flow of the mud... it is impossible for the houses and the areas to be inhabited again," Kalla said at his office, adding the firm should provide compensation for the people's losses.