More crude oil storage capacity is planned for Houston that would be able to accommodate supplies coming from the Permian Basin and Eagle Ford Shale, as well as from the Midcontinent, Gulf Coast and Canada, according to developers.

Fairway Energy Partners LLC has closed a private equity offering with net proceeds to fund the first phase of the Pierce Junction Crude Oil Storage facility. The project would convert three existing underground storage caverns at the Pierce Junction Salt Dome in south Houston into crude oil storage service and build out all of the requisite pipelines, brine ponds, interconnects and pumping capacity to put the facility in commercial service.

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 total capacity of 10 million bbl. Overall, Fairway has expansion rights to accommodate up to 20 million bbl at Pierce Junction. A second phase would bring the project to full capacity, Fairway said.

Phase I also includes the construction of two separate bi-directional 24-inch diameter pipelines intended to connect the facility to the existing Houston area crude oil grid, adding more than one million b/d of pipeline receipt and delivery capability in the Houston marketplace. The proposed pipelines will traverse about 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 company said. “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.”

“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,” said Fairway CEO Chris Hilgert. “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,”

Haddington Ventures LLC is an original sponsor of and major investor in the project.

“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,” said Haddington Managing Partner Chris Jones.