Fairway Energy to go public in 2016, eyes crude storage auction

(Updates in service date for the facility, adds plans for storage auction and potential futures contract)

HOUSTON, June 7 (Reuters) - Fairway Energy plans to go public in 2016 and has filed an initial registration form with the Securities and Exchange Commission, a company senior executive said on Tuesday.

The company will go public anytime after Aug. 1 and has not yet engaged any banks on the process, said executive Dana Grams at an Argus conference in Houston.

Fairway (NasdaqGM: FWM - news) is building some 11 million barrels of underground crude storage in Houston. The facility will connect local refineries and terminals on the Houston Ship Channel.

The company, whose website describes it as "a midstream company ... with particular emphasis on underground cavern storage," said it expects to begin service on the facility by Jan. 1, 2017.

Fairway is considering implementing an auction for space at its caverns, which would operate in a similar manner to the monthly auction for space at the Louisiana Offshore Oil Port (LOOP), said Grams, senior vice president of corporate development.

"We think we can go to an over-the-counter (OTC) type market and have a similar type of auction," he said.

Fairway is also talking with CME Group (Kuala Lumpur: 7018.KL - news) about launching a physically deliverable exchange-traded contract. The company is pushing for futures contracts for Western Canadian Select (WCS), Eagle Ford crude and domestic sweet crude, Grams said.

Customers will have the option to lease an entire cavern at Fairway's facility, totaling 1.5 million barrels of storage, Grams said.

(Reporting by Liz Hampton; Editing by Steve Orlofsky)