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Chapter Two

George Strake

Early Life and Career

George Strake was at birth an unlikely candidate to become one of America’s wealthiest people. He was born in St. Louis, Missouri, in 1894, the youngest of ten children in an impoverished family. His parents and two of his siblings died when he was still very young, and he was raised by his two eldest sisters. The family’s poverty was such that he had to drop out of school before he reached high school. He worked as a Western Union messenger boy, earning nine dollars a week. From his earliest days, he had a remarkably charitable and religious spirit. Of his nine dollars, he faithfully gave two each week to the Sunday collection at the Catholic church. The remaining seven went to his sisters for the remaining children who lived in a three-room St. Louis apartment.²³

George was tall and gangly, endowed from the beginning with piercing blue eyes and a commanding presence that marked him as a leader. He loved reading. He was deeply inquisitive about everything and loved to learn how things worked. He didn’t attend high school, but on a lark in 1913 he took the entrance exam for St. Louis University, relying only on his self-taught education. He passed the exam. When the university administrators learned he was self-taught with very little formal schooling and no money, they admitted him on a full scholarship. He was a good student who particularly enjoyed technical, financial, and engineering subjects.

He graduated in 1917, just as World War I came to America. Strake joined the Army Air Corps and became a wireless instructor and operator. After his return home, he and a wealthy young lady from Florida almost got married, but he delayed the wedding because she was rich and he was poor. She suggested he go to Mexico to find his fortune. He followed her suggestion and got a job with Gulf Oil in Tampico, Mexico. It was a wild place. Strake arrived shortly after Pancho Villa was assassinated with more than forty dum-dum bullets. The ghosts of Zapata and Madeira still haunted Mexico. War damage and carnage from the Revolution remained everywhere. Bandits were still common. In a short time, Strake rose to head of the Gulf office in Tampico, supervising nine to ten employees. He also met the woman who would become his wife, Susan Kehoe.

Strake and Susan met while both were on vacation in San Antonio. If George tended to be a bit crusty, Susan was convivial, genial, and outgoing. She never met a stranger. After they got married, it was thanks to Susan’s friendly disposition that they became close friends of their neighbors in Tampico, the William Buckley family. On many occasions, they babysat the Buckleys’ young children, baby Bill Buckley, Jr. (later the famous National Review magazine founder) and his young siblings, Jim and Pat. Their friendship led to a financial partnership. Buckley grew to love the Strakes and indicated to George that if he left Gulf Oil and went on his own, Buckley, with the assistance of some New York banks, would finance and participate in Strake’s exploration ventures.

With this assurance, Strake left the security of Gulf Oil and began pursuing oil prospects on his own as a “wildcatter.” Wildcatters were the brave, slightly mad fringe of the oil industry who pursued oil discoveries in unexplored frontier areas — examples including Glenn McCarthy, portrayed in the movie Giant, and the legendary Columbus Marion “Dad” Joiner, who found the vast East Texas oilfield, the largest of America’s oilfields in those early days. Ironically, Joiner hit oil only after selling more than 100 percent of the prospect to unsuspecting investors. Mexico was a dangerous place in the 1920s, still wildly lawless. Life was cheap there, and property rights of little regard. This was the Mexico depicted in John Huston’s great movie The Treasure of the Sierra Madre. But unlike the prospector depicted in the film, Strake amazingly succeeded and began to turn a profit.

Strake also began investing his profits in a small U.S. startup company named Radio Corporation of America (RCA), which dealt in the new technology of “wireless” or radio. Strake knew something about this, since he had used radio in the Army Air Corps. Later, in addition to making radios, RCA started the National Broadcasting Company (NBC). Strake was successful in both his technology and oil investments. By the late 1920s, however, Strake instinctively realized the end was coming in Mexico. Strikes began at refineries and oilfields in Tampico and spread, ultimately leading to the government’s seizure of the entire industry. Strake sold out and took his family out of Mexico well before the seizures, with $250,000 in profits. Grateful for his narrow escape with his wife from the increasing lawlessness and governmental expropriation there, Strake swore off Mexico.

He then turned his attention to a second industry and a new country — selling cars in Cuba. In the late 1920s Strake moved to Havana to start a car dealership (with the idea of perhaps also drilling a well or two in Cuba). After the instability of oil exploration, he wanted a stable economic foundation. In those days Ford, the dominant car manufacturer, made only black cars. Henry Ford’s famous saying in the 1920s was, “Any customer can have a car painted any color that he wants so long as it is black.”²⁴ Strake saw this as an opportunity. He believed he could sell colored cars in Cuba from other manufacturers. As it turned out, it was a very good idea at a very bad time. The Great Depression, in addition to a collapse in sugar prices, settled over Cuba, and there was little interest in buying cars of any make or color. After running through most of his fortune, Strake told Susan that they needed to get out of Cuba before they had to “swim back.”

The Strakes next intended to move to Oregon to enter the more stable lumber business. Susan’s mother in Houston became sick, however, and they returned there. Susan, no doubt, was pleased with this decision, as she was well loved in Houston with a wide circle of friends. Ultimately, their relocation to Houston would change their lives … and the lives of a great many other people as well.

George Strake loved to roam outdoors, using hunting or a similar excuse, while Susan nursed her mother. One area he explored near Houston lay east of the small town of Conroe, about forty miles north of Houston. During his explorations, he noticed two strange things. First, in an area southeast of the town, cattle and other livestock would not drink the brackish water. Second, in the same area, all creeks and rivers in the area of Conroe flowed northeast, moving against the southeast current of most local creeks and rivers. Thousands had gazed upon these irregularities and seen nothing, but Strake saw in them signs of a vast underground oil field. The topography and geology reminded him of the Mexican wells he had worked with near Tampico. Curious, he leased 8,500 acres at a cheap price. He took his theory and his prospect to eight different large oil companies for financing. They were not impressed, and all summarily rejected him as just another hopeless visionary peddling a sure dry hole. He had no geological staff, no exploration department, and no real track record in the United States. He had no seismic or torsion balance data. For over a decade, well after well had been drilled in the area — all without exception producing dry holes. The area was a graveyard of shattered dreams and broken companies. Strake later said the oil companies thought he was just a crazy lone wolf wildcatter, but he believed he was a “team of two” with God’s help. For a long time, his proposal remained an unlikely joke to everyone except himself.

Finally, he approached Susan, told her he thought there was oil, and asked her permission to invest the very last of their money in drilling the wildcat prospect — still in the depths of the Great Depression. Although another failure like Cuba would leave them destitute, Susan agreed, expressly conditioned on thrifty George’s promise to never again question anything she purchased if he hit oil.

George drilled, but hit only natural gas — a booby prize almost valueless in the early 1930s. In order to keep his leases in effect and to generate revenue for more drilling, Strake turned to a friend, W. T. Moran, a fellow Catholic (and also from the Midwest). Moran started a small refinery and filling station on the Houston-Dallas Highway to strip liquids from Strake’s gas and refine and sell it as gasoline. Surviving and extending his leases on shoestring gasoline sales from one small filling station, Strake drilled a second time, with his last dollars, deeper than anyone else had drilled — nearly a mile below the earth. He hit a vast underground ocean of oil at five thousand feet deep. As it turned out, the Conroe field was an immense pool of oil sitting under a massive cap of natural gas. The geological story of its creation under the ocean over fifty-five million years ago is little short of miraculous. It was the third largest oilfield ever discovered at that time in the United States — an immense elephant field in industry slang. Strake instantly became one of the wealthiest men in the world. His brave wife, Susan, much loved in Houston, quickly became a famous shopper in Houston, New York, and Paris.

As would often happen with Strake, his discovery also made many others around him incalculably rich. As just one example, in later years, as natural gas escalated in value, Moran’s right to buy the gas escalated from a single gas station into a vast fortune of utilities and pipelines, rewarding Moran many times over for his belief in Strake. A marker on the lawn of the courthouse at Conroe commemorates how Strake and his great discovery carried Conroe safely through the Great Depression and made it the “Miracle City.”

On the morning of January 12, 1933, in the space of thirty seconds, George and Susan almost became poor again very quickly. Two wells operated by other companies in the Conroe Field burst into flames and then exploded with the force of a nuclear explosion. The flames could be seen many miles away. The burning wells then exploded underground and cratered, producing an immense hole swallowing up many rigs in a seemingly bottomless pit. Even after the flames were extinguished through explosives, the field continued to pour oil and gas into the six hundred-foot-deep crater, causing pressure in the remainder of the field to drop. Strake’s fortune hung by a thread.

His luck held. Strake found an engineer named George Eastman who claimed to be able to stop the out-of-control holes. For the first time in oil history, Eastman drilled holes in an intentionally slanted direction (as opposed to vertical), stopping the intrusion. This technique of horizontal drilling would many years later become the basis of the fracking revolution. In 1933, against all odds, it saved the great oil field — and George Strake’s immense fortune. As the world slowly tumbled toward war with the Japanese invasion of Manchuria and the Italian invasion of Ethiopia, the world price of oil increased from prices as low as $0.10 per barrel to $1.20 and more per barrel. This meant Strake’s field became even more valuable, securing his position as one of the richest men in the world.

George Strake’s Secret

George enjoyed a happy, fulfilling life beyond his successful career. He and Susan had three children, and thanks to Susan’s friendly nature, they enjoyed an active and enriching social life. She was much loved in Houston for her generous heart. The Strakes also entertained on a substantial scale, hobnobbing with celebrities such as Frank Sinatra, Dorothy Lamour, Jane Russell, Robert Mitchum, and the like. George — extraordinarily thrifty himself — true to his promise, never questioned Susan’s expenditures as a member of Houston society, friend to movie stars, and serious shopper in venues ranging from Fifth Avenue to the Via Veneto. A relative of Susan’s who deeply loved her remarked facetiously that when she died, department stores in Houston flew their flags at half-mast.

As would be expected from a veteran of World War I, a wildcatter in lawless Mexico, and a man who had worked his way from poverty to riches at least three times, George could appear stern and sometimes gruff. But unlike most other wildcatters, George had a very strange secret. He held the curious belief that he was simply a stakeholder of the vast Conroe Field, and that it was a gift from God, not the result of his own cleverness or worth. He said that far from being a crazy Lone Wolf Wildcatter, he was actually a team of two. His job was to return the field’s vast wealth to the causes God approved. As a result of this conviction, he was strongly devoted to causes such as St. Joseph’s Hospital, the Boy Scouts, high schools and universities, but most of all to the Catholic Church. On his desk, he kept the saying of another legendary oilman and philanthropist from Pittsburgh, Michael Benedum: “God doesn’t care how much money you have when you die. God does care what you did with the money you had when you were alive.”

Strake deeply feared leaving substantial funds to his children because of the corrosive effect of money. In fact, he intended to give everything away while he was still alive, even the things he loved most. In all his contributions, he demanded total anonymity. He often said that he intended to give his last dollar away anonymously with his last breath.

When Father Carroll arrived from Rome with Pope Pius XII’s mysterious request for funding, he was relying on Strake’s uncanny ability to see the immense possibility where others could not. Just as Strake had been able to see an unlikely underground sea of oil where no one else saw anything of value, now he saw the possibility of a monumental archeological discovery under the Vatican. Like the pope, Strake had been consumed from childhood with the early Christian Church. He was also deeply pious, reading the Bible almost every day. His faith left him in little doubt that Peter would be found. In an age when the wealthy named grand projects for themselves like Rockefeller Center or Stanford University or Carnegie Hall, Strake was insistent that nothing be named for him at all. He wanted his involvement in the Apostle Project to be kept completely secret. The pope had found the perfect participant. Strake, for his part, had found his wildest wildcat.