Fairway has plans to use the funding to convert three of the eight existing underground storage caverns at the Pierce Junction Salt Dome into crude oil storage service, and to build out all the requisite pipelines, brine ponds, interconnects and pumping capacity to put the facility in commercial service. The Pierce Junction Salt dome is located in south Houston.
The initial phase of the projected is expected to begin 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 bbls. Fairway has expansion rights up to a total of approximately 20 million bbls at Pierce Junction.
Phase 1 also includes construction of two bidirectional 24-inch pipelines intended to connect Pierce Junction to the existing Houston area crude oil grid, adding more than one million bbls/d of pipeline receipt and delivery capability in the Houston marketplace. The proposed pipelines will trail approximately 21 miles across the Houston area to connect the caverns to the Genoa Junction and Speed Junction hubs. This will enable Fairway to provide receipt capability from inbound crude oil pipelines from the Permian and Eagle Ford Basins, Mid-Continent and Canadian regions and the Gulf of Mexico. The hubs will provide downstream connectivity to terminals, refineries and water outlets located in the Houston Ship Channel, Texas City and Beaumont/Port Arthur market areas.
Fairway will construct brine ponds with approximately 10 million bbls of capacity and central pumping and metering facilities at the site as a continued part of Phase 1. The project is designed as a closed system, minimizing any new air emissions as well as customers’ volumetric losses.
Following the completion of Phase 1, Fairway intends to take the project to its full capacity during the second phase, as they have secured the exclusive right to store crude oil on the Pierce Junction Salt Dome.
"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 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 played a major role in the funding transaction, and will continue as a major investor in Fairway.
"We are very excited about our investment in Fairway," remarked 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."