July 24, 2015 [OPIS] - Fairway Energy Partners (Fairway), a Houston-based crude storage company, said on Thursday that it has closed a private equity offering, and the net proceeds of it will be used to fund the construction of the first phase of the Pierce Junction Crude Oil Storage facility in south Houston.
Fairway plans to use the capital to convert three existing underground storage caverns at the Pierce Junction Salt Dome 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 bbl.
Overall, Fairway has expansion rights up to a total of about 20 million bbl 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 1 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 Midcontinent 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 bbl 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.
FBR provides investment banking, merger and acquisition advisory, institutional brokerage, and research services through its subsidiary FBR Capital Markets & Co.
Haddington, a Delaware limited liability company, is a Houston-based private equity firm that specializes in control-oriented investments in the midstream energy and infrastructure space. Haddington currently has approximately $572 million of assets under management.
