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Reviewed by Hillary Stevenson, Vice President for Energy Intelligence, and Jesus Davis, Vice President of Energy Services
Summary
A new refined products pipeline could ease some of California's fuel supply issues, but potential near-term fuel shortfalls remain due to refinery closures.
Open Season Begins for New Refined Product Pipeline
A binding commitment open season began Monday for a proposed refined product pipeline into California, but it is not scheduled to begin operating until 2029, leaving potential near-term fuel shortfalls in place when two refineries in the Golden State close over the next year. The open season will run until noon (Central Time) on December 19.
As proposed, the Western Gateway Pipeline Project, a partnership between pipeline giants Phillips 66 (Houston, Texas) and Kinder Morgan, Incorporated (Houston), will include construction of a 1,300-mile grassroot pipeline from Borger, Texas to Phoenix Arizona, plus reversals of existing pipeline flows in the Midwest and Southern California. The pipeline is expected to transport up to 200,000 barrels per day (BBL/d) of refined fuel.
Click on the image at right for a map of the proposed project.
Refinery Closures
The pipeline companies said the proposed project was a response to potential fuel shortages in California, Arizona and Nevada assuming Phillips 66's Wilmington, California, refinery and the Benicia Refinery, owned by Valero Energy Corporation (San Antonio, Texas)--close as scheduled in late 2025 and early 2026, respectively. The refineries slated for closure have a combined throughput of about 290,000 BBL/d.
Phillips 66 has ended operations at the 133,000-BBL/d crude unit at its Carson, California refinery.
Valero's two Benicia refineries, located near the San Francisco Bay, can process up to 157,000 BBL/d of crude oil. The complex includes a 144,000-BBL/d fuel refinery and a 13,000 BBL/d asphalt refinery. Valero told the California Energy Commission this past April that it plans to "idle, restructure, or cease" operations at both plants by April 2026. In May 2025, the refinery experienced a heater fire that closed its 77,000-BBL/d fluid catalytic cracking unit (FCCU). Valero began refining crude oil at Benecia in 1969. For more on that, see April 28, 2025, article - With Planned Refinery Closures, California May Have to Import Fuels.
Too Little, Too Late?
"The proposed Western Gateway Pipeline project certainly could be part of a long-term solution to the imbalance between supply and demand for transportation fuel in the Western U.S.," said Hillary Stevenson, vice president of energy intelligence for IIR Energy. "The proposed pipeline, assuming it gets built, will not be operating until 2029. This proposed pipeline project is a great idea, though long overdue. However, by itself, it feels like rearranging deck chairs on the Titanic."
Stevenson said recent California legislation, which enforced storage requirements, have played a part in declining refining profitability in the state. Other legislation, which called for drilling up to an additional 2,000 oil wells in the state starting in 2026, could bolster refining profitability. For more on that legislation, see October 6, 2025, article - California Enacts Energy, Climate, Wildfire Prevention Laws.
"The consequences of not building energy infrastructure are starting to bite in various places, not just California" commented Jesus Davis, Industrial Info's vice president of energy services. "Texas needs more dispatchable electric generation. The Northeast needs more in-bound gas pipeline capacity. High-voltage transmission capacity is needed in various areas. Our country's inability to enact national energy plans forces regions and states to suboptimize local plans. But the sum of the parts does not equal the need for a whole plan."
Western Gateway Project Details
P66 and Kinder Morgan described the Western Gateway Pipeline project as requiring the construction of the following segments:
- About 500 miles of 20-inch grassroot pipe running from the Borger, Texas, refinery to Kinder Morgan's El Paso Terminal
- Approximately 430 miles of new 20-inch diameter pipeline running alongside existing pipelines from El Paso to Phoenix, Arizona
In addition, existing west-to-east fuel pipeline flows will be reversed for the existing fuels pipeline from the Borger refinery to the Ponca City, Oklahoma, and Wood River, Illinois, refineries, both of which are owned by P66.
This proposed project could be an early test for the Trump administration's commitment to expand U.S. energy infrastructure while streamlining regulation. For more on that, see March 14, 2025, article - EPA Will Reconsider 31 Energy and Environmental Rules from Trump's Predecessors. Portions of the project will be co-located within existing pipeline corridors from El Paso, Texas all the way to the Kinder Morgan terminal in Phoenix, Arizona. From there, the product will be shipped utilizing existing pipelines that will be reversed to carry product from Phoenix into Colton, California.
Some environmental permits could be expedited as the portion of the project running from the El Paso terminal to Phoenix are planned to run alongside existing pipeline rights of way. But ligation is a possibility, which could delay the project's construction start and in-service dates.
Key Takeaways
- The proposed Western Gateway Pipeline Project could transport up to 200,000 barrels per day (BBL/d) of refined fuel to California
- The pipeline could help ease tightened fuel supplies caused by the closure of two California
- But the pipeline is not scheduled to begin operating until 2029
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