Doheny formed the
Pan American Petroleum and Transport Company (P.A.T.)—part of which later became the Mexican Petroleum Company (
Pemex)—to hold his two
Mexican companies (Mexican Petroleum and Huasteca), his Atlantic and Gulf Coasts facilities in the United States, and his California holdings. Doheny was also interested in plans to develop the oil industry in
Venezuela, and in building a pipeline from Colombia to Venezuela to make it more economical to export the Barco oil from the west coast of
Lake Maracaibo. In 1920 Pan American was the largest oil company in the United States, ahead of
Sinclair Consolidated Oil Corporation and
Standard Oil Company of Indiana. Automobile production was booming and oil prices were high. The Mexican Petroleum Company was the largest in Mexico, and Mexico was the largest oil producer in the world. By 1925, Doheny's net worth was $100 million ($ in dollars), more at the time than
John D. Rockefeller. in this 1924 photo In 1922
Albert B. Fall, U.S. Secretary of the Interior, leased the oil field at Elk Hills, California, to the Pan American Petroleum & Transport Company. Around the same time, the
Teapot Dome Field in
Wyoming was leased to Sinclair Consolidated Oil Corporation. Both oilfields were part of the US Navy's petroleum reserves. Neither lease was subject to competitive bidding. In 1924 rumors about corruption in the deals escalated into the
Teapot Dome scandal. Doheny's reputation was somewhat tainted by a
bribe paid to the
Secretary of the Interior,
Albert B. Fall in 1921. He made the "gift" of $100,000 in connection with obtaining a
lease of of government-owned land used for the
Elk Hills Naval Petroleum Reserve near
Taft, California. The resulting scandal broke soon after that, over similar bribes Fall accepted for leasing
Teapot Dome in Wyoming. Doheny was charged with bribing Fall but, in 1930, was acquitted. His son, Ned, who had delivered the money, and assistant Hugh Plunkett were also charged, but died before they could be tried. Nevertheless, Fall was convicted of accepting the bribe. Doheny sold a majority of the family's shares in Pan American Petroleum & Transport to
Standard Oil of Indiana, in April 1925, but retained all California assets, which he formed into a new company, Pan American Western Petroleum Company. Pan American Eastern Petroleum (the Mexico holdings, the Atlantic and Gulf Coasts holdings in the U.S., refineries, pipelines, and thirty-one tankers), which held the non-California assets, was sold to Standard. Pan American Western returned to its roots as an "upstream" exploration and production company. At the end of 1925, after Doheny had given up control of Pan American Petroleum & Transport, in order to exploit the oilfields in
Lake Maracaibo, the company gained control of
Lago Petroleum Corporation from
C. Ledyard Blair's Blair & Co. The transaction became the subject of a stockholder action in 1933, which alleged that the bankers, who were represented on the Pan American board, conspired to make excessive profits. In 1926,
Venezuelan Eastern Petroleum Corporation reorganized as a subsidiary of Pan American Eastern to buy and develop Venezuelan oil properties. But Doheny was not really involved, except passively through his remaining minority position in Pan American Petroleum & Transport. In the midst of the
Teapot Dome scandal, Doheny gave
Greystone Mansion (designed by
Gordon B. Kaufmann after a design competition) to his son, Edward (Ned) L. Doheny Jr., and his wife Lucy Marceline Smith (the couple married on June 10, 1914). He built the house in 1928, at a cost of
$3,188,000, and sold the property and accompanying ranch to his son for $10. When a second criminal trial for bribery began to loom for Doheny and Fall in 1929, the pressure on all parties reached a breaking point. The Dohenys tried to persuade Hugh Plunkett to be committed to a mental institute so that he could not then be made to testify against them. On February 16, Ned and Plunkett were found dead from apparent gunshot wounds. There were rumors that the two were having an affair. The full story was never clear. The police were not called until three hours after the shots had been fired, despite several members of the family being at home and having heard the yelling. The Los Angeles authorities immediately blamed Plunkett in the murder-suicide. In addition to the indictment of Edward Doheny in the Teapot Dome scandal, both Doheny and Plunkett had been indicted in the alleged bribe of
Albert Fall—as Ned (accompanied by Plunkett) had delivered the money. They had already gone through some trials.
Raymond Chandler, a former oil man, included a thinly veiled account of this event in one chapter of his novel
The High Window, presenting it as a bygone, hushed-up case. He had started work for the
Dabney Oil Syndicate in 1922 as a bookkeeper and auditor, but was fired a decade later. Beset by shareholder lawsuits in the wake of Teapot Dome, and the death of Ned, Doheny became a recluse and invalid. When she realized her husband needed an undisturbed home away for a while after the Teapot Dome travails and Ned's death, Carrie Estelle asked architect
Wallace Neff to design and build the Ferndale Ranch complex on their
Ojai, California property. Hundreds of workers completed the house in less than six weeks, including Neff's blueprints, by working day and night. ==Personal==