California Working to Thwart Offshore Drilling

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Written by Daniel Graeber for IIR News (Sugar Land Texas)

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Summary

Bipartisan legislation seeks to thwart drilling plans offshore backed by the federal government. At the same time, energy companies are looking to import petroleum products due to refinery closures in the state.

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The Crown Jewel of California

Though its refinery sector is on the decline, a bipartisan group of California legislators is backing a measure that would impose a moratorium on offshore drilling in state waters.

"Our coastline is the crown jewel of California," state assembly member Dawn Addis said in a statement Thursday. "We are here to say with one voice--Republican, Democrat, and Independent--that our shores are not for sale."

Addis recently introduced Assembly Bill 1536, which calls for additional legislation meant to limit offshore activity. Her bill follows a decision in federal court to allow Sable Offshore (Houston, Texas) to resume work off the coast of Santa Barbara.

Advocacy groups led by the Center for Biological Diversity and the Environmental Defense Center argued federal regulators overstepped their authority by skirting a public vetting period and statements of reason. The Pipeline and Hazardous Materials Safety Administration, part of the Department of Transportation, said an executive order issued by U.S. President Donald Trump early in 2025 muted state authority.

That means Sable can start sending oil through pipelines from its platforms off the coast of California. One of those pipelines, CA-324, formerly Line 901, has been idled since it ruptured in 2015, leading to the Refugio Oil Spill.

The spill released some 3,000 barrels of oil into the ocean and the onshore Refugio State Beach. The federal government at the time, under former President Barack Obama, said it was the worst spill in state history.

Dubbed the Santa Ynez Unit, Sable Offshore had worked at three platforms off the coast of California. The reserve was discovered in 1968 and was producing around 45,000 barrels of oil equivalent per day as of shut-in in 2015, the company said in an investor presentation from November.

Between 1981 and 2014, the company said Santa Ynez produced more than 671 million barrels of oil equivalent. The platform is tied to the California refinery sector by way of the pipelines.

All of the plants operated by Sable Offshore are listed as either closed or mothballed in IIR Energy's database.

California's environment is among the cleanest. It ranks second, behind Georgia, in terms of states that draw on the decomposition of organic matter to yield methane for utility-scale electricity production. Crude oil production, meanwhile, recently averaged around 100 million barrels per day, down from the 1980s peak of nearly 400 million annually.

Environmental concerns led to a permanent moratorium for offshore drilling in 1994, and there have been no new leases since then. Since Donald Trump returned to the White House for a second, non-consecutive term in office last year, executive orders and lease sales challenge that moratorium.

Refineries are Shutting Down

Elsewhere, California refiners are shutting down and the federal government had expected the state would need to rely on imports for refined petroleum products. This week, Valero Energy (San Antonio, Texas) said it would idle its refinery in Benicia, California, but would work to keep state supplies adequate by drawing on storage and imports.

Industrial Info in October said Valero would close the main refinery, with a capacity of 144,000 barrels per day (BBL/d), and an asphalt refinery, with 13,000 BBL/d in capacity by April. Phillips 66 (Houston) ran its last batch of crude oil through its Los Angeles refinery center late last year, explaining market dynamics were prohibitive of further activity.

Like Valero, Phillips said it would lean on external supplies to meet California demand. A network of pipelines connects 14 refineries in the state, though declines in refining capacity leave California heavily dependent on foreign deliveries to meet demand, largely from Canada.

California state laws, meanwhile, mandate that refiners make a special blend of gasoline that's less harmful to the environment, but it's more expensive to make, leading to the highest retail average price for a gallon of regular unleaded in the Lower 48 states. Travel club AAA listed California's state average price for Friday at $4.22 per gallon, compared to the national average of $2.80.

By the Numbers

• Average gasoline price of $4.22 per gallon in California
• 3 offshore units on Sable's radar
• 3,000 barrels released on California's coast in 2015

Key Takeaways

• State lawmakers oppose offshore drilling
• Refineries in the state are shutting down
• California's economy is among the cleanest

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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 over 250,000 current and future projects worth $30.2 Trillion (USD).