Genscape began monitoring crude inventories at Fairway Energy Partners’ newly developed cavern storage facility at Pierce Junction in Houston, TX, on the April 21 report date. The facility is currently comprised of two brine ponds with a combined capacity of approximately 7.3mn bbls that are connected to underground caverns of an equivalent size. The ponds, and corresponding crude storage capacity, make up Phase 1A of Fairway’s cavern project in Houston. A forthcoming Phase 1B expansion will provide an additional 3.6mn bbls of crude storage capacity at the facility, according to the company’s website.
Currently, only one of the ponds (FC001, 2.19mn bbls), has a significant amount of brine to monitor. As of the April 21 report date, Genscape analysis of this pond calculated just over 1.23mn bbls of stored crude. Significant brine levels were not detected in the second pond (FC002, 5.103mn bbls) as of the latest report, resulting in a storage value of 0 bbls.
The facility is being constructed at Pierce Junction, fewer than three miles south of the Houston Astrodome. Twin 24-inch bidirectional pipelines will connect Fairway’s cavern storage to existing Houston storage terminals at Speed Junction and Genoa Junction, which subsequently feed the Houston Ship Channel, Texas City, TX, and Baytown, TX, markets.
Though the two ponds total approximately 7.3mn bbls of capacity, there is only about 6.8mn bbls that is considered usable capacity, according to Texas Railroad Commission regulatory documents and Genscape imagery.
This cavern storage associated with Phase 1A increases operational crude storage capacity at facilities monitored by Genscape in Houston to nearly 76.4mn bbls. With the additions of the caverns, total operational crude storage capacity across Texas Gulf Coast locations (Houston, Beaumont-Nederland, TX, and Corpus Christi, TX) increases to nearly 149mn bbls.
Now that the caverns are operational, they will always be filled to capacity with some combination of brine and crude. When crude is pumped into the caverns for storage, an equivalent amount of brine is displaced into the connected ponds. Inversely, when crude is needed to be drawn out, an appropriate amount of brine is pumped in to displace the crude. Genscape monitors changes in brine levels via aerial imagery to derive the amount of crude stored in the caverns.
Fairway began developing the underground storage caverns in 2011, and in July 2015, the company closed funding for Phase 1 of the construction, according to a press release. Fairway’s original plans for Phase 1 included 10mn bbls of capacity, which was later updated to 11mn bbls. The same press release stated that the terminal could be expanded to about 20mn bbls.
Phase 1B will provide an additional 3.6mn bbls of crude storage capacity at the facility, according to the company’s website. Fairway has also submitted plans for a third brine pond, which would accommodate the additional crude storage and bring total pond capacity to near 11mn bbls. Genscape aerial imagery on April 20 confirmed that construction on the third pond has not yet commenced.
Underground storage is generally considered more economical and environmentally-friendly than above-ground storage tanks; Fairway storage rates for leases in April were near $0.42/bbl/month in February, according to the Tank Tiger. The Fairway caverns are the first major underground crude storage facility in the Houston area.
Genscape’s U.S. Gulf Coast Crude Storage Report tracks capacity and construction trends to provide a better understanding of market fundamentals. Genscape’s in-the-field monitors provide exceptional accuracy and advance notice of these fundamentals. Click here to learn more or request a free trial of Genscape’s U.S. Gulf Coast Crude Storage Report.