Inspectioneering
News

Fairway Energy Partners to Construct Houston Crude Oil Storage Facility

Fairway Energy Partners, July 24, 2015

Fairway Energy Partners, LLC (Fairway) has announced the closing of a private equity offering, the net proceeds of which will be used to fund the construction of the first phase of the Pierce Junction Crude Oil Storage facility. Fairway plans to use this capital to convert three existing underground storage caverns at the Pierce Junction Salt Dome in south Houston into crude oil storage service and to build out all of the requisite pipelines, brine ponds, interconnects and pumping capacity to put the facility in commercial service. FBR Capital Markets & Co., a subsidiary of FBR & Co., served as the sole placement agent and initial purchaser in this offering, which was executed pursuant to Rule 144A under the Securities Act of 1933 and other exemptions. 

The initial phase of the project is expected to be in service by the end of 2016 and has been designed to allow for storage of three segregations of crude oil for a total capacity of approximately 10 million barrels. Overall, Fairway has expansion rights up to a total of approximately 20 million barrels at Pierce Junction. Following the completion of Phase I, the company intends to take the project to its full capacity during a second phase of the project. Fairway has secured the exclusive right to store crude oil on the Pierce Junction Salt Dome.

Phase I also includes the construction of two separate bi-directional 24-inch pipelines intended to connect the facility to the existing Houston area crude oil grid, adding more than one million barrels per day of pipeline receipt and delivery capability in the Houston marketplace. The proposed pipelines will traverse approximately 21 miles across the Houston area to connect the caverns to the Genoa Junction and Speed Junction hubs. This should enable Fairway to provide receipt capability from inbound crude oil pipelines from the Permian and Eagle Ford Basins, the Mid-Continent and Canadian regions as well as the Gulf of Mexico. The hubs provide downstream connectivity to terminals, refineries and water outlets located in the Houston Ship Channel, Texas City and Beaumont/Port Arthur market areas.

In the first phase, Fairway will also construct brine ponds with approximately 10 million barrels of capacity and central pumping and metering facilities at the site. The project is designed as a closed system, minimizing any new air emissions as well as customers’ volumetric losses. “This project will serve the growing crude oil storage needs driven by the significant delivery of new pipeline-delivered crude oil into and through the Houston market. We’re offering a new, low-cost WOD:47144.2 option to the market as a fee for service based provider. We do not intend to take title to the crude oil that we will handle and store, nor will we trade crude oil,” said Fairway CEO Chris Hilgert. “We are delighted to have the continued support of our original financial sponsor, Haddington Ventures, LLC (Haddington), as well as the new investors in Fairway who were brought to us through the engagement and efforts of FBR.”

Haddington was active in facilitating the transaction and will continue as a major investor in Fairway. “We are very excited about our investment in Fairway,” said Chris Jones, Managing Partner of Haddington. “Our long history with underground storage fits well with Fairway’s initiative and we look forward to continuing our involvement with the company to advance this critical project into the marketplace.”

 

About Fairway Energy Partners LLC

Houston-headquartered Fairway is a growth oriented crude oil storage company focusing on constructing and placing into service the Pierce Junction Crude Oil Storage facility. The company is strategically positioned as the only independent salt dome crude oil storage terminal in the greater Houston market area. The company’s website is www.fairwaymidstream.com. For additional information to contract for storage capacity, please contact Kevin Hickey, Chief Commercial Officer, at (713) 960-4742 or kevin.hickey@fairwaymidstream.com.


Comments and Discussion

There are no comments yet.

Add a Comment

Please log in or register to participate in comments and discussions.

Interested in equipment reliability & integrity? Sign up for weekly updates.

Inspectioneering Journal

Explore over 20 years of articles written by our team of subject matter experts.

Company Directory

Find relevant products, services, and technologies.

Job Postings

Discover job opportunities that match your skillset.

Case Studies

Learn from the experience of others in the industry.

Event Calendar

Find upcoming conferences, training sessions, online events, and more.

Industry News

Stay up-to-date with the latest inspection and asset integrity management news.

Blog

Read short articles and insights authored by industry experts.

Acronyms

Commonly used asset integrity management and inspection acronyms.

Asset Intelligence Reports

Download brief primers on various asset integrity management topics.

Videos

Watch educational and informative videos directly related to your profession.

Expert Interviews

Inspectioneering's archive of interviews with industry subject matter experts.