HOUSTON — With available storage facilities for oil filling up in Houston, Fairway Energy Partners said the time is right for the 11 million barrels of crude storage space it’s currently developing.
Fairway Energy Partners plans to convert three salt dome caverns more than 2,000 feet under Southwest Houston into crude oil storage. The company, which is backed by Haddington Ventures, is targeting a completion date of late 2016.
“The market in Houston is very tight today,” Christopher Hilgert, CEO of Fairway Energy, said Friday in an interview. “The current tanks in Houston that have been built out are nearly or fully contracted. There’s essentially no spot capacity available in Houston, and the rates are very high right now.”
The latest figures from Genscape Inc. indicate that the Houston has about 63 million barrels of oil stored at terminals and refineries, totaling about 60 percent of capacity. Much of that space is contracted to long-term customers, those looking for a short-term spot to stash their crude could see space as harder to come by.
The Texas Gulf Coast has about 128 million barrels stored at refineries and terminals. It’s also about 60 percent full, Genscape said.
Spot storage market prices are tough to track.
Prices aren’t as liquid as other oil and gas benchmarks, and going rates can vary depending on the grades of oil and access needed. One of the benchmarks for spot storage prices is the CME Group’s futures contract for space at the Louisiana Offshore Oil Port. That has risen from about 20 cents for the right to store a barrel for a month to more than 95 cents on Friday.
“We’re seeing storage levels that we’ve never seen across the U.S.,” Hilgert said. “Crude is piling up everywhere, Cushing is effectively full, and that’s started to domino down to the Gulf Coast.”