Fairway Energy Partners, a start-up building a large crude storage facility in the Houston, Texas, area is planning to go public later this year on the New York Stock Exchange.
The initial public offering of stock will happen after 1 August, said chief commercial officer Dana Grams at the Argus North American Crude Transportation Summit.
The company's new facility will have an initial storage capacity of 11mn bl, about 1mn bl higher than previous estimates. The capacity could be as high as 20mn bl in subsequent phases.
The company hopes to make the facility a key hub in the growing Houston-area crude market.
Fairway will convert three underground salt caverns at the Pierce Junction storage facility into crude storage and build out requisite pipelines, brine ponds, interconnects and pumping capacity.
The initial phase of the project is expected to be in service by 1 January 2017, Grams said.
Fairway has talked to several companies about dedicating the smallest cavern — which is 1.5mn bl — to a single customer use.
Fairway is talking with CME Group and the New York Mercantile Exchange (NYMEX) about possibly creating a hub for a futures physical delivery pricing benchmark at the new storage facility for Western Canadian Select crude, Eagle Ford crude and Domestic Sweet crude. The company is also looking at a monthly auction system such as the one used by the Louisiana Offshore Oil Port (LOOP).
"We think we can go to the over-the-counter broker type market," Grams said.
As part of the first phase, Fairway will build two bi-directional 24-inch pipelines to connect the storage facility to the Houston-area grid. The two lines will connect to the Genoa Junction and Speed Junction hubs which allow Fairway to take oil from many regions, including the Permian and Eagle Ford basins, the midcontinent, Canada and the Gulf of Mexico. The hubs also provide downstream connections to terminals, refineries, and water outlets in the Houston Ship Channel, Texas City and the Beaumont/Port Arthur, Texas, area.
The use of caverns to store crude puts Pierce Junction in rare company, as most crude storage is above-ground. Major storage sites that make use of the domes include LOOP and the US government's Strategic Petroleum Reserve (SPR) complex.
The financing for the first phase of the project was achieved through a private equity offering. Houston-based Haddington Ventures is a major investor.
