Washington (Platts)--11Sep2008

US Department of the Interior Secretary Dirk Kempthorne said Thursday he
would purge the department's Minerals Management Service of any "negative
elements" in an effort to restore public faith in the agency.

Kempthorne's announcement comes in the wake of scathing inspector general
reports detailing unethical relationships between MMS personnel and the oil
and gas industry. "We must and we will eliminate any remaining negative
elements in the Minerals Management Service," Kempthorne said in a statement
released early Thursday.

Interior's IG on Wednesday released three reports outlining how MMS staff
had arranged for contracts with a former MMS employee, accepted gifts from the
oil and gas industry and engaged in sex and drug use with industry contacts.

"I am outraged by the immoral behavior, illegal activities and appalling
misconduct of several former and current long-serving career employees in the
[MMS'] Royalty in Kind program," Kempthorne said. "These individuals have
eroded the trust the American citizens deserve to have in their public
servants," he added.

The RIK program allows oil and gas companies to pay royalties with oil
and gas rather than cash. Those employees mentioned in the IG report worked
for that program.

The investigation looked into more than a dozen current and former
employees and concluded that at least some of them should be fired.

"During this investigation, as we awaited the Inspector General's final
reports, individuals were transferred out of the RIK program," Kempthorne
said. "Now that we have received this report and have the information to
proceed further, we will take swift action to restore the public trust."

Meanwhile, US Representative Henry Waxman, the California Democrat who
heads the House of Representatives' Oversight and Government Reform Committee,
said Wednesday he would hold a hearing September 17 on the IG report.

"The [Bush] administration's energy policy has enriched oil companies at
the expense of consumers, the environment and our national security," Waxman
said in a statement. "It appears that the officials who are supposed to be
looking out for the taxpayers have instead been corrupted by gifts from the
oil companies and a culture of ethical failure."

Senator Dianne Feinstein, the California Democrat who heads the Senate
appropriations subcommittee that oversees Interior, on Wednesday described the
MMS staff behavior detailed in the reports as "completely unacceptable" and
called on Kempthorne to explain what had been done to fix the problems.

--Derek Sands, derek_sands@platts.com