WASHINGTON, Sept 11 (Reuters) – U.S. Interior Secretary Dirk Kempthorne on Thursday said he was “outraged” by department workers who had sex, used drugs and took gifts from employees at regulated oil companies, while one senator called for a Bush administration official to resign over the scandal.

The Interior Department’s inspector general issued a scathing report on Wednesday that found “a culture of substance abuse and promiscuity” at the department’s Minerals Management Service, whose employees handled billions of dollars in oil and natural gas supplies that were turned over by companies as in-kind royalty payments for drilling on federal lands.

“I am outraged by the immoral behavior, illegal activities, and appalling misconduct of several former and current long-serving career employees in the Minerals Management Service’s royalty-in-kind program,” Kempthorne said. “We will take swift action to restore the public trust.”

Democratic Sen. Bill Nelson of Florida called for the agency’s top head, MMS director Randall Luthi, to resign.

In response to the inspector general’s report, Luthi had said that “I do not believe Americans have lost financially,” but admitted “it is too early to tell” if government workers gave oil companies financial favors at the expense of taxpayers.

In a letter to Kempthorne on Thursday, Nelson asked for all department employees involved in the scandal to be immediately fired and for the secretary to ask Luthi to submit his resignation.

“Besides being a sad commentary on the failures of certain public servants, this case shows us how the oil industry can hold sway over government officials,” Nelson said.

Nelson called for hearings into the scandal by the Senate Commerce Committee, on which he serves. The House Resources Committee is planning a hearing on the matter next week.

While not responding directly to the senator’s letter, Kempthorne said: “We must and we will eliminate any remaining negative elements in the Minerals Management Service.”

In his report, the inspector general said some MMS workers in the royalty-in-kind program took cocaine and marijuana and had “illicit sexual encounters.”

Government workers also got drunk at social events with employees of oil companies doing business with the agency and MMS workers had “brief sexual relationships” with industry contacts, the inspector general said.

The oil companies named in the report were Chevron (CVX.N: Quote,Profile, Research, Stock Buzz), Shell Oil (RDSa.L: Quote, Profile,Research, Stock Buzz), Hess Corp (HES.N: Quote, Profile, Research,Stock Buzz) and Gary Williams Energy Corp.

(Reporting by Tom Doggett; editing by Jim Marshall)