On the 26th of May 2006, hot mud mixed with gas began spurting out of the ground near an area where exploration was being carried out by Lapindo Brantas Inc. (Lapindo). At the time of the incident, Lapindo was attempting to drill 3 km below ground in search of natural gas. The mudflow occurred only 150 metres away from the Banjar Panji 1 shaft, which is located in the village of Renokenongo, in the sub-district of Porong, Sidoarjo regency, East Java. According to a number of independent experts, the cause of the mudflow, which first occurred in rice fields near Porong, is the result of erroneous drilling procedures. The casing (the restraining pipe of a mineshaft) which should have been attached (and was last attached at a depth of 3500 feet), was left uninstalled in order to save on costs. One share-holder had previously warned about such negligence, but the company paid no attention. As a restraining wall (casing) was not put in place at a depth of 9297 feet, a “loss and kick” effect occurred from the difference in pressure. The loss and kick effect then pushed mud from below the surface up the well (hole) that had been drilled in search of gas. With the drill head blocking the well (having failed to be extracted) hot mud began to crack the roof of the restraining wall of the shaft at a depth of 3580 – 4241 feet. The mud splurged out from the ground through a crack created by the eye of the drill, 150 metres away from the well.

Although the mudflow had occurred, the problem could have been resolved through proper management on the part of Lapindo. The retrieval of a drilling rig from the drill site on the 3rd of June 2006 constituted a major mistake that served to complicate and prolong efforts toward stopping the mud flow. Furthermore, a number of other efforts were not carried through to fruition, as Lapindo was slow to secure funding to fix the problem. Meanwhile, the government has also been slow in reacting to the disaster. The Lapindo Mudflow Investigation Team (Tim Investigasi Lumpur Lapindo) which was created relatively early on, on the 14th June 2006, concluded that the mud flow had been caused by Lapindo‟s carelessness. The National Team for Management of the Sidoarjo Mudflow (Tim Nasional Penanggulangan Lumpur Sidoarjo), was created on the 8th September 2006, four months after the mud flow began, to deal with the disaster.

For the non-technical aspects of the disaster, an Implementation Unit (SATLAK, Satuan Pelaksana), was created at the Regency level, and the Coordinating Implementation Body (SATKORLAK, Satuan Koordinasi Pelaksana), was created at the provincial level. The Department of Energy and Minerals and the Department for Employment also set up their own teams. The creation of these various teams, without any clear strategy, led to the largely fragmented and uncoordinated handling of the disaster resulting in its ineffectiveness. Another contributing factor to the severity of the disaster was the nature of the funding support provided by Lapindo for the National Team (Timnas). The National Team lacked the authority to make Lapindo provide funding for their operations, which was needed to combat the mud flow disaster. In implementing their plans, the National Team was required to await approval from Lapindo. Even requesting a bulldozer required permission from Lapindo.

On the 24th of November 2006, the mud flow was at the helm of another incident when a gas pipeline for Pertamina exploded, swallowed by the mud. As many as 12 people died as a result of the massive explosion, which created a fireball 400 metres high, visible from 50 kilometres away.

After seven months of operation, and the completion of as many as 15 reports, the National Team was abandoned, and replaced by the Sidoarjo Mudflow Mitigation Agency (BPLS, Badan Penangggulangan Lumpur Sidoarjo), in April 2007. The creation of this agency, recognised by Presidential Decree 14/2007, has done little to improve the response effort. The BPLS has been unable to carry out its role as an umbrella organisation, aimed at coordinating the many government bodies set up to handle the disaster.

It has been alleged that the appointment of the head of BPLS was not capability-based. Sunarso, a retired Brigadier General, is seen as having insufficient knowledge on how to deal with the disaster, while also lacking in experience and knowledge of East Java. He was appointed through his personal relationship as an advisor to Aburizal Bakrie, in the Ministry of Social Welfare.
 
As a result of such inept handling, the mud flow has grown out of control, spreading out across a wider area. What began as 5000 cubic metres of mud flow per day quickly rose to as much as 150,000 cubic metres per day, or enough to fill 40 to 60 Olympic size swimming pools. At the present stage, the total amount of mud that has come out of the ground has reached 340 million cubic metres, or enough to cover the greater metropolitan area of Jakarta in 30 cm of mud. The continual flow of mud has made everything in the surrounding areas rapidly disappear. Ricefields, houses, factories (along with all contents), and the toll way, have been swallowed by mud. After two years, more than 14 thousand houses have been lost, leaving 75 thousand people displaced. The total area engulfed by the mudflow disaster has reached 1800ha, covering 9 villages in three sub-districts (Porong, Tanggulangin and Jabon) of the Sidoarjo Regency.

With mud continuing to spill from the ground, the disaster is far from over. The effects have been numerous: including land subsidence, new gas leaks in residential areas, human exposure to gas, lack of access to basic living needs and other problems that can only multiply. As the area affected by the mudflow increases, the number of victims will also rise.