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The Sanchez Family Strikes Natural Gas and Riches Not Far from the Streets of Laredo

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Early one recent evening Antonio Sanchez, 60, his son Tony Jr., 33, and their partner Brian O’Brien, 43, settled back in their Laredo, Texas offices to watch the evening news. The lead story was, of course, the weather and the shortage of natural gas, and a politician came on to say he suspected a plot by gas producers to drive up prices by hoarding. The normally good-humored Tony Sr., a descendant of the Spanish don who founded the frontier town in 1755, exploded with anger. “That’s asinine!” he screamed, pounding the table and startling secretaries in the outer office. “How in the hell can they say that? You show me a gas producer who’s going to sell his gas elsewhere when there’s a market here in Texas, and I’ll show you an idiot!”

Antonio Sanchez is known as anything but an idiot in the gas business. He and his partners, who make up the Sanchez-O’Brien Petroleum Group, are sitting atop part of what could be the largest pool of natural gas discovered in the continental U.S. in two decades. It may be as much as 10 trillion cubic feet, or normally enough to supply the entire country for six months.

The critical gas shortage seems to be easing, at least temporarily. President Carter signed an emergency bill that lifts, until July 31, the federal price ceiling of $1.42 per thousand cubic feet on natural gas sold interstate—compared to the $2 paid by buyers within Texas. As a result, Texas-produced gas is filling the pipelines north to stricken communities.

Laredo seems an unlikely place to figure in any national crisis. In a 1975 survey on the quality of life, its muddy unpaved streets, high unemployment and cruel climate gave it a ranking of 95th out of 95 U.S. cities with populations under 200,000. Antonio Sanchez Sr. is all too familiar with the town’s troubles. (In the 1880s his great-grandfather Santiago owned a million-acre ranch outside Laredo, but the family fortune was allowed to dissipate.) As a boy, Tony searched the railroad tracks for coal spilled from passing trains to heat his family’s hovel. After peddling papers, he finally dropped out of the eighth grade to work full time. He even tried his hand at boxing until the Texas State Golden Gloves champion “damn near beat me to death.”

By the 1950s Sanchez owned a small office-supply company in Laredo. “I almost starved,” he says. One evening, while riding home from a local Democratic party meeting, a passenger in the car asked if anyone could help him buy up leases for oil and gas exploration among the ranchers in the area. “I was almost asleep,” Sanchez says, “but I perked up and said, ‘I’m your man.’ ” He was paid $2,500 for the first lease, plus a small percentage of the well’s output which he later sold for $7,500. By the early 1960s he was earning up to $50,000 per year.

Tony Jr., meanwhile, obtained a law degree from St. Mary’s University in San Antonio. Three months among the lobbyists and politicians in Austin as assistant to the lieutenant governor whetted his appetite for some of the action in natural gas. It was selling for only about 10 cents per thousand cubic feet at the time, but Tony Jr. convinced his father that eventually there would be a shortage. In 1971 the Sanchezes joined up with their friend O’Brien, an English-born geologist renowned for his uncanny ability to divine oil and gas deposits. On Sept. 22, 1974 the three men stood beside the noisy drilling rig as their first well came in. “You’d think we’d get drunk—but we didn’t,” recalls the elder Sanchez. “We just went home, and I cooked some cowboy stew.” More than two years later the well is still yielding $4,500 worth of gas every day.

In the subsequent scramble for leases, the Sanchezes found themselves pitted against the big oil companies. “They’d send in their experts,” says the gregarious Tony Sr., who is the “belly-to-belly negotiator” for his group, while his more reserved son handles the legal and financial ends of the business. “The competition would work 9 to 5. But we worked night and day, seven days a week. Local people would lease to us because they were flattered we took the time to come down and see them.” Today the Sanchez-O’Brien Group boasts an annual income of $11,680,000 from its drilling operations. Yet both Sanchez generations—Tony Jr. is married and has two small children—remain in the modest homes they owned before their bonanza. O’Brien lives in Houston with his wife and five children.

In Laredo, the Sanchezes are trying to bolster the local economy. They have set up a bank and a savings and loan association and are planning a new industrial park that would strengthen the city’s tax base. Tony Sr. declares: “I want to see this town become what my ancestors dreamed it would be.”