(CNBC) Just a few miles from Houston’s Astrodome, a cluster of subterranean salt caverns will soon be able to store enough oil to fill the famed stadium.
By the end of 2016, phase I of Fairway Energy Partners’ Pierce Junction crude oil storage facility will come online, touting three caverns capable of socking away a combined 10 million barrels of black gold. That will represent 25 percent of the Houston market’s total crude storage capacity, and the privately held company has plans to expand to 20 million barrels.
“We are actively leasing to capacity right now and the marketplace is being received very favorably,” said Chris Hilgert, chief executive of Fairway. “We have a competitive cost advantage that we are trying to exploit as much as we can, and offer a much-needed service to a market that we feel needs more liquidity, which storage offers.”
Salt caverns are typically a less costly means of storage than renting a tanker ship as “floating storage” or the using above-ground tanks. Salt caverns are also a less common option for commercial crude storage, making Pierce Junction a notable midstream newcomer to the Texas oil market.
“We have seen a big renaissance of production here in the U.S., and lots of new pipeline infrastructure has been built into the Houston market, and the market has responded the best it can to build surface tankage,” says Hilgert. But “more storage is needed in order for the [area] to be able to handle all of this inbound crude from those pipelines.”