Valero Plans Gasoline Imports as California Refineries Close

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Written by Will Ploch, Assistant Editor-in-Chief for IIR News (Sugar Land, Texas)

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Summary

Valero, Phillips 66 and Kinder Morgan are at work on a series of importation and midstream projects that could continue to bring gasoline to California, as the state's refining capacity decreases.

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Gasoline Imports Provide Lifeline to Golden State

Valero Energy Corporation (San Antonio, Texas) isn't giving up on California, despite the looming closure of a major refinery within the state. The company said it "anticipates importing additional gasoline volumes to the (San Francisco) Bay Area in the near term," which could come as a relief to Californians already facing the highest gasoline prices in the nation.

Industrial Info is tracking about $1.3 billion worth of active and proposed projects from Valero across the U.S., nearly 90% of which is attributed to U.S.-based crude oil-refining projects. Outside of California, Valero operates 11 U.S. refineries with a total 1.9 million barrels per day (BBL/d) of crude capacity.

Valero "will idle its Benicia Refinery and continue to supply California's market through a combination of existing inventories and imports, as discussions about the refinery's future continue," according to a press release from the office of California Governor Gavin Newsom. "This marked a constructive development from an earlier announcement that included the possibility of full closure and exit from the Northern California market in early 2026."

Newsom and Valero both said the Benicia Refinery will produce gasoline through April 2026, after which the refinery will idle completely, and Valero will continue importing gasoline into Northern California.

Last October, Industrial Info confirmed an April 2026 closing date for Valero's 144,000-BBL/d refinery in Benicia, California, and 13,000-BBL/d Benicia Asphalt Refinery. "Industrial Info had been tracking the likelihood since closure rumors began to circulate last year," said Hillary Stevenson, Industrial Info's Vice President for Energy Market Intelligence. "The July 2025 cancellation of a planned first-quarter 2026 turnaround at the Benecia Refinery was among the clear signs."

Chief Executive Officer Land Riggs vowed his company would continue to supply fuel for its California wholesale operations. For more information, see October 28, 2025, Breaking Energy News (BEN) article - Valero Pressing Ahead with Closure of Benicia Refineries in California.

Earlier this week, Valero said Benicia would "proceed with idling through a phased approach, starting with its processing units in February, due to required mandatory state inspections that cannot be deferred. The refinery will continue producing gasoline as it works down the inventories, but expects most refining process units to be properly idled by April."

Newsom's office said operations at Valero's 135,000-BBL/d refinery in Wilmington, California, "remain unchanged" for the present, while Valero said Wilmington will "maintain normal operations."

Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant and Project databases can learn more about related activity--including capacities, necessary equipment and closure schedules--from plant profiles for the Benicia Refinery, Benicia Asphalt Refinery and Wilmington Refinery, and a detailed project report for the Benicia closure.

By the Numbers

• More than $1.3 billion: Value of active and proposed Valero projects across the U.S.
• 157,000 BBL/d: Capacity of Valero's Benicia refineries, which is winding down and set to be fully idled in April
• 1.9 million BBL/d: Capacity of Valero's U.S. refineries outside of California

Help on the Way with Western Gateway?

The Benicia closures follow Phillips 66's (Houston, Texas) decision to close its 133,000-BBL/d Los Angeles Refinery and adjacent Los Angeles (Wilmington) Refinery, which was driven by state policies, including those that enforced storage requirements for in-state refiners amid high state fuel taxes. For more information, see October 20, 2025, BEN article - Phillips 66 Has Ceased Operations at its Los Angeles Area Refineries; subscribers can learn more about the closure from the detailed plant profiles and project report.

But the refinery closures have created a significant opportunity for Phillips 66 and Kinder Morgan Incorporated (Houston). The two energy titans are combining their talents to proposed the Western Gateway Pipeline Project, which would pair a new, 1,300-mile grassroot system running from Borger, Texas, to Phoenix, Arizona, with a reversed segment of Kinder Morgan's existing Santa Fe Pacific Pipeline (SFPP) West system, which runs from Phoenix to Southern California.

These two segments would be combined with Phillips 66's existing Gold Line, which runs from its Borger Refinery eastward to terminals in Kansas, Missouri and Illinois. Under the current proposal, Gold Line would be reversed to move product (including jet fuel and diesel) from Phillips 66's mid-continental ("Mid-Con") refineries, such as those in Wood River, Illinois, and Ponca City, Oklahoma, to Borger, Texas, and then onward to West Coast states. If built, it would be the world's largest fuel conduit, according to companies involved.

Click on the image at right for a map from Kinder Morgan detailing the full route for the proposed Western Gateway Pipeline Project.

Brian Mandell, the head of marketing and commercial operations for Phillips 66, said in a recent quarterly earnings-related conference call that "California will continue to be a waterborne import market" and his company will "continue to import barrels by the water." But he also championed Western Gateway: "The pipeline will allow us to move products from our Mid-Con refineries for likely better-than-Mid-Con netbacks. All our Mid-Con refineries can make Arizona-grade gasoline and California-grade gasoline. So, we see the pipeline as a great opportunity for California, for Arizona, for Nevada, and for all the potential shippers."

Other midstream companies, including ONEOK Incorporated (Tulsa, Oklahoma) and HF Sinclair Corporation (Dallas, Texas), are weighing proposed pipeline systems that would compete with Western Gateway for the West Coast gasoline market. For more information, see November 13, 2025, BEN article - Three Refined Product Pipelines Aim to Backfill California's Reduced Refining Capacity.

Key Takeaways

• Valero aims to import gasoline into the San Francisco Bay Area to offset volumes set to be lost in pending refinery closures.
• Valero's Benicia Refinery is set to idle completely in April, adding to Phillip 66's California refinery closures at the end of 2025.
• The Western Gateway Pipeline Project is one of several proposed midstream systems that could further alleviate the refined products shortfall in California.

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About IIR News
IIR News is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resource's Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 250,000 current and future projects worth $30.2 trillion (USD).