What Republicans REALLY Mean When They Say Drill! Baby! Drill!

They mean sex, corruption, and political scandal.

I first covered the scandal that is breaking big today at about the same time as Governor Palin took the oath of office in Alaska. 

This appears to have been the scam: Some time ago, the Interior Department introduced a "royalties in kind" program, which allowed oil companies to pay for the privilege of drilling for oil on our land in kind–in oil and gas–rather than in cold hard cash. The gimmick is that it was supposed to facilitate accounting. Up until recently (don’t worry–I’m going to figure out these dates), the oil went into the Strategic Petroleum Reserve (SPR).* But the SPR apparently is all filled up now, so recently the US government started contracting with companies to sell the oil on the "open market." But, as these things are bound to happen in the BushCo world, we didn’t take open bids for the contracts to sell the oil. We apparently just gave companies with ties to a bunch of Interior Department employees in Denver the contracts, which of course meant we got less money than we otherwise would have.

I even predicted,

How appropriate–this Administration will begin with an oil scandal. And it looks like it will end with one, too. 

That looks to be prescient, as the Department of Interior Inspectors General’s Report describing the scandal has thrown a whole lot of sex and drugs and improper gifts into the mix.

Government officials handling billions of dollars in oil royalties engaged in illicit sex with employees of energy companies they were dealing with and received numerous gifts from them, federal investigators said Wednesday.

The alleged transgressions involve 13 Interior Department employees in Denver and Washington. Their alleged improprieties include rigging contracts, working part-time as private oil consultants, and having sexual relationships with — and accepting golf and ski trips and dinners from — oil company employees, according to three reports released Wednesday by the Interior Department’s inspector general.

The investigations reveal a "culture of substance abuse and promiscuity" by a small group of individuals "wholly lacking in acceptance of or adherence to government ethical standards," wrote Inspector General Earl E. Devaney.

The reports describe a fraternity house atmosphere inside the Denver Minerals Management Service office responsible for marketing the oil and gas that energy companies barter to the government instead of making cash royalty payments for drilling on federal lands. The government received $4.3 billion in such Royalty-in-Kind payments last year. The oil is then resold to energy companies or put in the nation’s emergency stockpile.

Between 2002 and 2006, nearly a third of the 55-person staff in the Denver office received gifts and gratuities from oil and gas companies, the investigators found.

And don’t forget–those "improper gifts" even included a scam on a house for Sue Ellen Wooldridge and Stephen Griles. Sounds like … Ted Stevens, doesn’t it? Or, for that matter, Duke Cunningham, but that wasn’t oil and sex and drugs, just defense contracts and sex and drugs.

See, this is why those Republicans get so worked up when they scream for drilling. It’s not a solution to an energy crisis for them. It’s a shortcut to a gravy train that might just get them laid.

Update: the reports (there are three of them) are here

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  1. diablesseblu says:

    Great post EW,

    Am I’m certain it will be the “little people” involved who will “pay”. Look what happens when you go after a bigger fish like Foggo.

  2. pinson says:

    This part is priceless:

    The Justice Department declined to prosecute Smith and former Associate Director of the Minerals Revenue Management program Lucy Querques Denett, who the report says manipulated contracts to ensure they were awarded to former Interior employees.

    The Bush Justice Department is solely for persecuting political enemies, and they really don’t care if anyone knows it at this point. If Obama can’t wrap this around the necks of McCain and Palin, we deserve four more years of having the government owned by oil companies. Kakistocracy.

  3. Arbusto says:

    This report reminds me, when I was the Chief Flight Instructor for a small Bay Area flight school 30 yrs ago, a laid off UAL pilot working for me as a flight instructor, got a call from a friend saying a blowpipe (actual product) company in California was looking for a new crew for their DC-9. As I heard it, the DC-9 was decked out better than Playboys DC-9 and the stews (I know Cabin Attendant is pc), required by the FAA, weren’t stews at all but high-class call girls. Shorter version, the Co-Pilot samples the wares of one of the Stews, who, after the return from Acapulco, called the Co-Pilot, the wife answered the phone, got pissed. Next day called the CEO of said blowpipe Co. End result everybody got canned.

    I guess the more things change (Obama agent of change) the more they stay the same.

    • cbl2 says:

      I was a Flight Attendant once in a galaxy far, far away –

      let’s just say I turned down employment with Gulf Air on three different occasions . . .

  4. sojourner says:

    Probably splitting hairs, but I wonder what the heck the government was doing with the natural gas in-kind royalties? Oil can be stored and transported easily… Natural gas is another animal — you need a pipeline to transport it. It is possible that the gas was being re-injected to keep reservoir pressures up, in which case no royalties would have been due. Still, that can wind up being a substantial amount of money!

    • prostratedragon says:

      Interesting detail. Maybe a nice little extra slush fund?

      @9 “I can see it now:”
      Well, not actually; but O October!

  5. plunger says:

    Holy Crap!

    McCain made a huge strategic error, alienating Chris Matthews, relegating him to the sidelines (along with Olbermann) in the political coverage – by forcing NBC management into sidelining both of them.

    Matthews show tonight is a full frontal attack on McCain and the BS narrative du jour. He even delivery a Special Comment, Olbermann Style, slamming the great Wurlitzer and the Weapons Of Mass Distraction that McCain’s campaign is utilizing (under the direction of Karl Rove).

    If you didn’t catch Matthews comments tonight, it could be a game changer.

  6. druidity36 says:

    “engaged in illicit sex with employees of energy companies they were dealing with and received numerous gifts from them”

    OOOOooooo… illicit sex. I love that word. Why do they only use it in regards to vices? It just means illegal, really.

    Did they get the gifts from the employees they had sex with? Because i gotta say, i might succumb to such flaunted salaciousness.

    Well, probably not.

    Makes me want to see who the guilty parties are…

    mmmm, scratch that… probably skeevy people…

    excuse me, but i’m feeling ellipses crazy tonight…

  7. scribe says:

    Well, to be sure, the folks in P*rn Valley could have a field day with that whole “Drill now!” and “Drill, baby, drill!”

    I can see it now: “Slippery Oil Drillers 8″ and “Jim Derrick Drills Now!”

    You get the idea….

  8. cbl2 says:

    hey Emptywheel and wheelers,

    Charlie Savage has a 3 pager on this in NYT – little more detail for you wonkier types

    NYT

    it it at these moments when I think of some retired underworld guy sitting somewhere in Boca, musing admiringly at all these thugs have gotten away with in such a short amount of time

  9. pajarito says:

    Scott Horton says the DOJ is the most corrupt department in Bush Co. world. I think Interior is neck-and-neck with DOJ.

    I work for DOI, corrupt as it can be where I see it.

    • emptywheel says:

      Well, and this scandal is really about the intersection of the two–both earlier, where DOJ looked the other way and said they couldn’t do anything about the MMS defrauding the taxpayers and now, where they’ve declined to prosecute clear perjury and fraud.

      • pajarito says:

        They could get rid of Mukasey and replace him with a tape loop: “Decline to prosecute. Decline to prosecute….”

        • MarkH says:

          They could get rid of Mukasey and replace him with a tape loop: “Decline to prosecute. Decline to prosecute….”

          Well, they’ve got the Colorado AG for that.

          I’m wonder…

          oil companies owe Alaska royalties

          Which companies?
          How much?
          Which years?

          oil companies offer oil & gas in kind

          How’s it get to DOI in Denver?
          Why don’t they sell it on the world market?
          Did ANY revenue from it’s sale get back to Alaska?
          Where did DOI sell the oil & gas? Is that a violation of law?
          How much below market did they sell it? Is that some kind of hand-out?
          Who got the contracts and were they ‘connected’ to Repubs, Bush or Texas?

          Who is Sec. of DOI?
          How’s he/she connected?

      • pajarito says:

        EW, don’t ask me about Reclamation dredging a private boat marina for a Nevada Development with public money (tens of millions $$$$). Well outside the stated agency mission.

        Funny is, the Developers asked for Reclamation to redredge it about 5 years later, again at public expense!!! I bet they did, too.

    • MarkH says:

      I work for DOI, corrupt as it can be where I see it.

      Do you have a clear view of the stuff this article refers to? If so you ought to be very careful of your safety and get your story out in public as quick as possible. Sometimes the best secret isn’t kept, but told.

  10. Rayne says:

    Awfully convenient, isn’t it, that a mess of the documents related to the royalties in AK went up in smoke due to a technical glitch (ahem)?

    There isn’t enough lipstick and lubricant in the world for this mess, John McCain…because it’s probably not a little deal that some of the royalties might have been for Alaska Native Americans, and Senator McCain was up to his ears in the Bureau of Indian Affairs.

  11. WilliamOckham says:

    Wow. There were two women in the program who were practically hookers. One ran a sex toy company on the side. They were known as the “MMS chicks” and often stayed in ‘lodging provided by’ the oil companies, but never expensed by anybody at the oil company (i.e. they were staying in guys’ rooms).

  12. maryo2 says:

    dKOS discusses Alaska selling natural gas to Japan and other Pacific Rim countries. http://www.dailykos.com/
    See “McCain/Palin: Putting Japan First.”

    dKOS notes that Alaskans “received $3200 each in kick back checks this year. So they’re pumping up prices by selling off the gas they told you was ours to the Japanese, and then paying themselves bonuses when they do! Which, not coincidentally, has the effect of hiking the prices.”

    The reason that Sen. Wyden knows so much about natural gas is that Oregon is trying to build a port to receive the stuff. There are environmental issues to work out, but the project will probably continue.

    http://www.deq.state.or.us/wq/…..ralgas.pdf
    “One project is to construct a liquefied natural gas terminal (LNG) at the Port of Coos Bay. The second is to build a major new gas transmission pipeline that would run 223 miles and connect the LNG facility to existing pipelines near Roseburg and Malin, Oregon.”

    Drilling is not the answer, baby.

  13. emptywheel says:

    Oh, this is interesting, from Savage:

    On one occasion in 2002, the report said, two of the officials who marketed taxpayers’ oil got so drunk at a daytime golfing event sponsored by Shell that they could not drive to their hotels and were put up in Shell-provided lodging.

    Norton–a native Coloradan–went on to become Counsel for Shell.

    This whole thing stinks even more than I expected, and I’ve been anticipating bad stench for over a year.

    • WilliamOckham says:

      This is bad, really bad. I have to go have dinner w/my family (hurricane’s a coming, last night to eat out), but I was around the oil and gas business during the time period covered by the report. One of my buddies probably witnessed some of this stuff, unknowingly. More details later.

  14. freepatriot says:

    somebody said foggo wants to talk

    what say, EW ???

    sound like a ”Grey Mail” defense ???

    some limited immunity could help the economy here

    so many repuglitards would shit their pants the laundry industry would BOOM

    • emptywheel says:

      Oh, it’s just your standard gray mail. Dusty’s gonna make one more big for the CIA to save his ass.

      Sorry I didn’t post on it. It’s just so predictable and I’m grouchy today.

      But that’s okay because now I’m reading about those family value Republicans selling coke and sleeping together while I pay their salaries.

      • freepatriot says:

        and that surprised you ???

        didn’t dusty have hookers too ???

        and with a name like dusty, well, the suspected coke use just sounds so plausible

        until somebody gets caught in a bathroom stall with larry craig and a pound of blow, where is the surprise in all of this

        if we’re scoring on a cumulative scale, there’s really nothing new here today

        mcsame defends pedophilia, foley

        repuglitards sex and drugs, haggard

        sex for influence, cunningham, foggo and a lot more than I could list in this small innertube

        so really, since this new scandal is missing the homosexual content and the pedophilia, we’re talking about the same old small time repuglitarded scandals

        • MarkH says:

          and with a name like dusty, well, the suspected coke use just sounds so plausible

          Are you implying that “Poppy” Bush has a drug problem?

  15. john in sacramento says:

    EW:

    What Republicans REALLY Mean When They Say Drill! Baby! Drill!

    Another one for the pile o’ Republican sex scandals

    JUNE 5–A technology billionaire was a drug fiend who trafficked in cocaine, Ecstasy, and methamphetamine, spiked the drinks of business associates and employees, hired prostitutes for himself and others, and maintained several narcotics dens, including one in an underground lair at his Los Angeles mansion, prosecutors charge. In a remarkable federal indictment unsealed today in Los Angeles, Broadcom co-founder Henry T. Nicholas III is portrayed as an out-of-control wild man who scored drug caches for Super Bowl parties and rock festivals and had his dealer invoice him for these illicit purchases. A copy of the felony drug conspiracy indictment against Nicholas, who is reportedly worth about $2 billion, can be found below. The 48-year-old Nicholas, who was charged with securities fraud in a separate U.S. District Court case, allegedly “used threats of physical violence and death and payments of money to attempt to conceal his unlawful conduct,” according to the indictment.

    http://www.legalreader.com/archives/003904.html

    He’s a big fundraiser for Cali Republicans

    • MarkH says:

      He’s a big fundraiser for Cali Republicans

      He’ll probably be in the grip of CA AG Jerry Brown before ya know it.

  16. JimWhite says:

    Good snark from the IG’s cover letter:

    The remaining current employees await your discretion in imposing corrective administrative action. Others have escaped potential administrative action by departing from federal service, with the usual celebratory send-offs that allegedly highlighted the impeccable service these individuals had given to the Federal Government. Our reports belie this notion.

  17. Rayne says:

    OT — Oh F*CK. How’d I miss this? Apparently too busy the last 5 days, dammitall. Explains the grouchiness, perhaps, ‘cuz I’m suddenly feeling pissed.

    If Congress can’t hold these mother-f*ckers accountable now, how are they going to do it if it’s [good freaking god forbid] McCain-Palin?

  18. bobschacht says:

    Everyone complains about the mudslinging and lying, but the CW is that “Everyone hates it, but it works.” (NB: Karl Rove probably loves it.) Until we can drive a stake through the heart of that meme, we’re going to get more of the same.

    What I’d like to see from the Obama campaign is a calculated attempt to absolutely destroy McCain’s credibility because of these kinds of ads. If this were easy to do, Al Gore would be completing his second term now. Or John Kerry would be completing his first term. But its gotta be possible, and I’ll bet that the Obama campaign can figure out how (That will probably require that they send all the DLC folks in the campaign off to Ohio to conduct a GOTV drive, in order to get them out of the room).

    If McCain and Palin get absolutely shredded for their lies and smears, maybe politicians in the future won’t feel compelled to use these tactics.

    Bob in HI

  19. WilliamOckham says:

    These people set up an oil and gas company inside the federal government. A company that was doing $4 billion in business a year. They set up the whole structure (front/mid/back office and econ. analysis). This was a complete sham, set up for no other reason than to give these creeps a reason to party and to pretend to oil bidness bigwigs. Truly disgusting.

    • MarkH says:

      These people set up an oil and gas company inside the federal government. A company that was doing $4 billion in business a year. They set up the whole structure (front/mid/back office and econ. analysis). This was a complete sham, set up for no other reason than to give these creeps a reason to party and to pretend to oil bidness bigwigs.

      OMG, that is one very big party.

      But, there should be some kind of records of how much came in, when and what went out. Prolly Enronish record-keeping, but there ought to be something.

      Connecting Alaska state gov’t., oil company, DOI Denver records ought to point a finger to somebody skimming a bit to pay for the party.

      I wonder if these records are public enough or are they going to be covered up and require excessive force (subpoenas) to get it out.

      Somewhere in this sordid story of oily money, sex, drugs and Republicans there’s very likely to be a Right turn where some money heads to the RNC and then off around the country like a rocket to brighten up campaigns everywhere. Pure speculation on my part, but that’s always been the case in prior scandals of this kind. The only difference here is the size. This is huge.

  20. Mary says:

    2- “The Justice Department declined to prosecute Smith and former Associate Director of the Minerals Revenue Management program Lucy Querques Denett”
    If it doesn’t involve getting to participate in kidnapping and torture, the DOJ just can’t be bothered to involve itself. Poor Foggo, if only he’d just used CIA employees, or better yet – DOJ employees who apparently live to service – instead of outsourcing to get his hookers.

    5 – I don’t know how they operate, but they should have had access to underground storage for the gas.

    http://www.eia.doe.gov/pub/oil…..asics.html

    • WilliamOckham says:

      Based on the description in the report, I don’t think they needed to store the stuff. They were cutting contracts to have the stuff shipped on pipelines, processed, and sold on the open market.

  21. R.H. Green says:

    Speaking of not posting…. John Conyers had a meeting today at 10 AM to discuss Mukasey and contempt. Any news out yet?

  22. masaccio says:

    EW has covered a bunch of repub scandals, but I have to rank this one at the tippy tippy top. Loathsome people, sex and drugs, and oil and money? Who could ask for more?

  23. wavpeac says:

    All I can say is that I am glad that is includes sex. That helps to make the evangelicals angry. They hate those sex scandals…drugs too. All bad, in a very good way.

    If it was just about numbers and rich people getting richer…we’d be sunk. That god that greed,power, and sex addiction seem to go hand in hand.

    • WilliamOckham says:

      More than the sex, they’ll hate the ’sex toy’ angle. Nothing makes them madder than the idea of people having fun while having sex.

      The real scandal is more fundamental. They let these people set up an oil and gas trading company, funded by you and me, in Denver (Lakewood, CO actually). The vast majority of the oil and gas under their control comes from the Gulf of Mexico (GOM). Why wasn’t this office in Houston? Hmm, maybe so these folks could get constant freebies on trips to Houston. This whole thing stinks at some very fundamental levels.

      • MarkH says:

        The vast majority of the oil and gas under their control comes from the Gulf of Mexico (GOM). Why wasn’t this office in Houston?

        Wait, I thought it was supposed to be oil companies drilling in Alaska who had a deal to provide oil & gas in kind. What’s Gulf oil got to do with it? Were they doing the same deal for Gulf oil companies as for Alaska?

        There is some difference you know. In Alaska they’re drilling on state lands, I think. In the Gulf it’s U.S. waters.

    • Bluetoe2 says:

      Sex doesn’t bother the evangelicals. When they are caught with their pants around their ankles they know the drill. Go on TV and with big crocodile tears, plead for forgiveness and admit they have sinned, and more sobbing. The self-humiliation is the perfect antedote to hypocrisy.

  24. masaccio says:

    OT: Nouriel Roubini calls out the free market ideologues:

    So now Comrades Bush, Paulson and Bernanke (as originally nicknamed by Willem Buiter) have now turned the USA into the USSRA (the United Socialist State Republic of America). Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill of $300 billion.

  25. bobschacht says:

    There’s a curious thing here that is beginning to form a pattern for me.

    The Democrats keep wanting to talk about issues.

    The Republicans want to talk about people.

    But sex scandals are about people. Your ordinary Joe SixPack (Dang, my fingers kept wanting to type “Sexpack”) understands about sex– or thinks he does– but global warming, health care, the economy, they’re all just too complex to understand.

    The Democrats need to learn how to talk more about people. Not just in the abstract, but in concrete terms.

    This should be high priority.

    Bob in HI

  26. AZ Matt says:

    MMS has been a mess fo years. The poorly written contract screwup on royalities not being high enough was bad enough. I had read that there would be sex, drugs, and but no Rock & Roll involved. Sleazy crap.

    • DrDick says:

      MMS normally charges about 60% of market value on leases and royalties, relies on the lessees to verify production, and does little or no oversight. Mess does not even come close. Ask any Indian who leases out trust land, which is part of the basis for the Cobell case.

      • prostratedragon says:

        Oh! Oh! I shoulda read further! Here’s an avenue!

        The Grand Unified Theory of Republican Corruption will be promulgated in our lifetime.

  27. DrDick says:

    Dayam. This one has all the Republican sleaze rolled into one. Lobbyists, illicit sex, corruption, bribery, and oil. It really does encapsulate the Bush (mal)administration.

        • prostratedragon says:

          Same thing.

          But one way to have some fun with this little pocket of the mess might be to find out how some of those leases and whatnot were financed.

  28. Bluetoe2 says:

    NPR covered the story today but not once did they say who the employees were, Republican appointees, drunk with power and the smell of a powerful gasoline. Just one more example of how Republicans govern, oh wait, Republicans rule they don’t govern. The Monarchists.

  29. wangdangdoodle says:

    Drill, Baby, Drill has a special meaning in the Doodle household.

    We also have a 9/11 tradition around these parts… no TV, no media.

    See y’all on the 12th.

  30. LS says:

    Texans (TexBetsy)…re: Ike…looks like it’s going towards Houston/Galveston or even more NE…don’t let your guard down yet it could move back westward..it was supposed to hit near Port A, but it looks like it might not, and it might not track over Austin as we thought…it’s a huge storm, and we might get rain and some wind, but it is shifting NE…look out Houston/Galveston/LA…look out NOLA. This storm is completely unpredictable. Just sayin’.

  31. dmac says:

    drive by–

    wanted you to know–important. pay attention in the future.

    fox is doing an echo thing to take away the scratchy sound of palin’s voice.
    artfully making her sound forceful.

    msnbc is toning it.
    cnn is basing it.

    this is some important shit people. really. seriously.

    it’s gone beyond coaching. doctoring is now taking affect.

    p.s. sorry about being gone lately in the midst of all the important stuff, have things i have to take care of.

    AND where’d the newsbox go?

  32. dmac says:

    also forgot, the fox echo is to tone her voice down, and also to make the crowd noise more prevalent.

    that matters.

    any sound guys here?

    steveaudio? add to this?

    take care pups. keep your ears pealed.

    • wangdangdoodle says:

      Not surprised. Her voice is like fingernails on a chalkboard. I’m sure they’ve heard the feedback.

      • Rayne says:

        I can’t listen to her.

        And the idea of that catterwauling wretch delivering a State of the Union address fills me with absolute dread.

        • LS says:

          The unavailability of the people to vet her is really scary…it is driving the Pukes into a frenzy “for” her, and everyone else into a frenzy to “stop” her.

          This race is Obama vs Palin…McCain has been neutered. Unprecedented. God help us….

          Something might yet come up to kiabosh this tsunami…worse than Ike.

  33. wigwam says:

    See, this is why those Republicans get so worked up when they scream for drilling. It’s not a solution to an energy crisis for them. It’s a shortcut to a gravy train that might just get them laid.

    Drill, baby, drill; Daddy wanna lay some pipe.

  34. LS says:

    Wangdang..I think they just said a little while ago on the local news that they have called it off already, but with the track I’m seeing now…I think it will most likely miss us..and go east…typical. I’m sure we live in some kind of “vortex”…we need “some” rain…but surely not the “wind”…

    It might change again and I might eat my words…we’ll see. It is so big that we might get something…

  35. prostratedragon says:

    Hot damn, this better not turn out to be the kicker:

    In a statement today, House Speaker Nancy Pelosi (D-CA) criticized “how cozy the relationship between Big Oil and the Administration’s regulators have been,” which has “cheated the American taxpayer out of billions of dollars owed them by the oil companies.”

    From ThinkProgress who, as impassively as Raymond Shaw miming his solitaire routine, have been dealing out drips and drabs of this story all evening.

  36. bigbrother says:

    Late but did Bushco:
    Attack Iraq unprevoked
    Attack Iran unprevoked
    Attack Afghanistan unprevoked
    Attack Pakistan unprevoked
    Attack Russia unprevoked
    Where is his CENTCOM logistics and war plan?

  37. libbyliberal says:

    EW — Well said and reported. We never get to fully process each outrage, because there is a fresh one right behind it.

    Kinda OT… but Sarah Palin seems to be Alaska’s answer to Florida’s useful Katherine Harris, the SofS. One more ambitious, corrupt, front-woman to baldly enable.

    • skdadl says:

      I’d want to hear what he went on to say right after that clip cuts out. It seemed to me he was making an obvious point in stressing how qualified Hillary is. The contrast with Palin is implicit, but most people would have picked it up — it allowed him to stay gracious, and then he made a joke about himself. I’m wondering, though, what he said right after that. Silly network soundbites.

  38. Mary says:

    41 – I was answering the question sojourner asked in 5, ” I wonder what the heck the government was doing with the natural gas in-kind royalties? Oil can be stored and transported easily… Natural gas is another animal — you need a pipeline to transport it.” In kind royalties for gas aren’t really hard to deal with because there is usually depleted oil field or aquifer storage available near where the gas is produced. I haven’t read the report, but Marcy does point out that the in-kinds for oil were originally directed to the strategic reserves, and when the reserves reached their oil storage capacity, then they went to the private sales shenanigans.

    I don’t know what the agreements were for the gas, if the in-kinds were targeted originally for a program like strategic reserves or not, but to answer the question in 5 it wouldn’t be unusual for a royalty owner to want in-kinds on gas, and normally it wouldn’t be that hard to store until sales in the pipeline. All the gas pipelines have complicated formulas as to who gets credit for what gas sold from the pipeline, since everything comingles for transport.