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The project is a significant private-sector response to the loss of nearly one-fifth of California’s oil refining capacity. It would establish a direct pipeline connection between California and major U.S. refining centers, potentially reducing the state’s growing dependence on waterborne fuel imports.

Western Gateway would have an initial capacity of approximately 230,000 barrels per day and is being designed to accommodate future expansion without requiring additional pipeline construction. The companies are targeting completion in 2029.

New route would connect California to U.S. refining centers

Western Gateway would combine approximately 900 miles of new pipeline with existing infrastructure owned by Phillips 66 and Kinder Morgan.

The pipeline system would require Phillips 66 to build a new Western Gateway Pipeline, which would flow from Borger, Texas, to Phoenix. The company would also reverse its Gold Pipeline, which connects with the Explorer Pipeline, allowing refined products from St. Louis and other Midwest supply points to flow toward Borger.

Kinder Morgan would contribute its existing SFPP East Line between El Paso, Phoenix and Tucson. Its SFPP West Line, which currently flows east from Colton, California, to Phoenix, would be reversed to move fuel into California.

Phillips 66 and Kinder Morgan first proposed the system in October 2025 and subsequently solicited commitments from potential shippers. The final investment decision moves the project beyond the proposal and commercial-development stages, although construction remains contingent on regulatory approval.

Refinery closures reshape California fuel market

The project comes as California confronts concerns about fuel availability and affordability after two major refinery shutdowns. Phillips 66 ceased fuel production at its 139,000-barrel-per-day Los Angeles refinery at the end of 2025. Valero Energy subsequently ended refining operations at its 170,000-barrel-per-day Benicia refinery in April 2026.

Western Gateway could replace a substantial portion of the lost in-state production with gasoline, diesel and jet fuel manufactured elsewhere in the United States.

California is largely isolated from the Gulf Coast and Midcontinent refined-products pipeline network. That isolation has left the state dependent on local refineries and increasingly on imports delivered by ship. Western Gateway would create an additional supply option capable of competing with waterborne imports and potentially reducing exposure to overseas-market disruptions.

Notably, the investment indicates that major fuel suppliers project California to require substantial supply of oil and refined products for the foreseeable future despite the state’s policy to reduce long-term oil consumption.

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The Blueprint’s executive summary highlights the key drivers behind the crisis: declining in-state crude oil production, the planned shutdown of northern California’s last major crude pipeline, and the closure of key refineries. Together, these factors contribute to a fragile fuel supply system that could push California’s gasoline prices well above the national average in 2026.

According to the authors, California currently imports more than 65% of its crude from overseas, shifting reliance away from domestic sources and exposing the state to geopolitical and transportation risks. Refinery numbers have plummeted from more than 40 in the 1980s to just a handful today, a decline the authors attribute to high regulatory costs and policy decisions discouraging local production.

A critical infrastructure concern centers on the San Pablo Bay pipeline, the sole northbound crude line feeding Northern California refineries. Under current conditions, its operator has signaled an imminent shutdown—possibly as soon as the end of 2025—due to unsustainably low throughput and rising operating losses. Without it, the state would need to shift to tanker trucks or maritime shipments, adding up to 50 ¢ to $1 a gallon in fuel transportation costs.

The authors argue that recent legislative efforts, such as SB 237, which allows limited new drilling, and AB 30, which enables expanded gasoline blends, are insufficient to stabilize supplies or prices, and may offer only marginal benefits.

The report calls for several urgent policy actions to avert worsening supply insecurity. This includes reopening and expanding in-state production infrastructure such as the Las Flores Canyon pipeline and offshore fields to boost crude supplies. It also includes state financial support to maintain refinery operations and federal engagement to preserve critical petroleum infrastructure.

The authors say failure to act could accelerate refinery closures, deepen international fuel dependence, raise consumer costs, and jeopardize state and national energy security.

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The proposed pipeline system would require the construction of a new Western Gateway Pipeline, which would flow from Borger, Texas, to Phoenix, and the reversal of a pipeline that currently flows from Colton, California, to Phoenix.

To bring supply from the Midwest to the West Coast, the project would also involve the reversal of a pipeline that currently flows from Borger, Texas, to St. Louis, Missouri.

The new pipelines could reduce concerns over fuel supply from the planned closure of two refineries that represent 17% of the state’s oil refinery capacity and supply neighboring states.

Phillips 66 announced that it will close its 139,000-barrel-per-day Wilmington Refinery in Los Angeles in the fourth quarter of 2025. Valero Energy announced that it would cease operations at its 170,000-barrel-per-day Benicia refinery in northern California by the end of April 2026.

The Western Gateway Pipeline will have a capacity to ship up to 200,000 barrels per day of refined products from the Midwest into Arizona, according to the companies.

In June, California Energy Commission Vice Chair Siva Gunda outlined a series of policy recommendations to help stabilize California’s gasoline and petroleum markets that include increasing imports of gasoline.

The bill authorizes gasoline containing 10.5% to 15% ethanol by volume to be sold in the state for use as a transportation fuel. The authorization lasts until the California Environmental Policy Council completes its review of those blends. Additionally, CARB must either adopt a regulation establishing a specification for those blends or assess that it is not possible for a regulation establishing a specification for those blends to meet specified requirements.

California Energy Commission Vice Chair Siva Gunda included the evaluation of E15 in its policy recommendations to help stabilize California’s gasoline and petroleum markets.

In October 2024, Newsom issued a directive asking CARB to the study of the impact of ethanol blending in gasoline to lower gas prices without compromising environmental protections.

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The five-year delay comes two years after California passed SBX1-2, which gave the CEC new powers to monitor the gasoline market and impose penalties on refiners who charge more than a maximum margin for refining gasoline. The change comes in response to California’s high gasoline prices, declining refining capacity, and recently announced plans to close two refineries, in 2025 and 2026.

Under the resolution for the delay, the CEC allows that if it adopts a maximum GGRM and penalty before 2035, a refiner could request an exemption to penalties if they “made significant investments in gasoline producing units” at a California refinery between 2026 and 2030. The CEC also reserved the right to revise or rescind the resolution and to implement the law.

In June, CEC Vice Chair Siva Gunda recommended pausing the GGRM and penalty implementation for a “reasonable length of time” as one of his policy recommendations to help stabilize California’s gasoline and petroleum markets. The Western States Petroleum Association wanted a 20-year pause to the profit cap.

The CEC still plans to implement rules under ABX2-1 to require oil refineries to maintain minimum inventories of refined fuels, feedstocks, and blending components and to have resupply plans to cover production loss during maintenance.

In other efforts to address the investment environment for the oil and gas industry, the legislature is considering draft legislation that would streamline the permitting process for drilling new oil wells in existing fields until 2036.