Ultra-tight supplies of gasoline and jet fuel in Southern California will likely get some much-needed relief after a trio of companies announced plans Tuesday to move forward on a major pipeline project designed to send refined fuel to the West.
Phillips 66, Kinder Morgan and HF Sinclair made a final investment decision to proceed with the Western Gateway Pipeline, valued at $5 billion. The companies hope to complete the project in 2029, subject to receiving the necessary permits and regulatory approvals.
One leg of the project would represent the first-ever pipeline system to deliver motor fuels into California.
Spanning 1,300 miles and incorporating new and existing infrastructure, the pipeline can “improve affordability and assurance of supply for customers in the Western United States,” Kinder Morgan CEO Kim Dang said in a statement.
Analysts have often described California as a “fuel island” disconnected from refining hubs in the U.S. that is increasingly reliant on foreign supplies of oil and refined products.
The Golden State’s vulnerability to potential price gasoline price spikes and supply constraints have been highlighted by recent in-state refinery closures.
Phillips 66 shut down its twin refinery in the Los Angeles area in 2025 and by earlier this year, Valero closed its 145,000 barrels-per-day facility in the Northern California town of Benicia.
The Valero and Phillips 66 facilities combined to account for about 18% of California’s total refining capacity to process gasoline, diesel, aviation and other transportation fuels.
The Western Gateway Pipeline project has a design capacity of 230,000 barrels per day and the system is being developed to allow for future expansion. The plan calls for no new pipeline construction within California.
“No doubt about, it’s a net positive,” for Southern California, said David Hackett, president of Stillwater Associates, a transportation energy consulting company in Irvine.
Here’s how the project would work:
A combination of existing pipelines carrying refinery supply from as far away as St. Louis and the Gulf Coast of Texas will move refined products west, via newly constructed pipelines that will connect with lines already in service.
Meanwhile, the flow on an existing pipeline that now runs from the San Bernardino County community of Colton into Arizona would be reversed, allowing more fuel to remain in California.
The entire pipeline system will also provide a connection into Las Vegas.
“When you look at the total supply for California, that’s California refineries plus imports from around the world,” Hackett said. “It’s that imported portion, which is expensive, that will be reduced” if and when the pipeline goes into place, “and that will tend to ease gasoline prices in California to some degree, everything else being equal.”
Hackett estimated the Western Gateway Pipeline could shave “around a nickel” off the price of each gallon of gasoline sold in Southern California.
Phillips 66 CEO Mark Lashier said the project “is expected to strengthen fuel supply reliability and deliver a more cost-effective, resilient path for growing markets across the West.”
Gov. Gavin Newsom, through a spokesperson, reacted favorably to Tuesday’s announcement.
“For years, industry has pointed to California being a ‘fuel island’ as a challenge. Now, we have a solution underway — a bridge connecting California to the rest of the country’s fuel supply,” deputy communications director Anthony Martinez said in an email to the Union-Tribune.
“We’re encouraged by this investment and support efforts that strengthen the resiliency of California’s fuel supply as we continue reducing our dependency on oil.”
In 2020, Newsom issued an executive order banning the sale of new gasoline-powered cars, SUVs and light trucks by 2035.
For years, high gas prices have been a financial headache for California motorists, who consistently pay more than drivers in any other state.
The average price for a gallon of regular in San Diego stood at $5.68 on Tuesday, according to AAA. That’s $1.67 higher than the average price in the U.S.
The final investment decision comes just a few months after Phillips 66 and Kinder Morgan said they received “strong market interest” and commitments from shippers and investors for Western Gateway.
Dang of Kinder Morgan said Tuesday, “We expect to earn attractive returns on our investment based on the incremental project earnings above those of our contributed assets.”
Under the joint venture agreement, Phillips 66 will own 49.9% of the system, Kinder Morgan will own 35.1% and HF Sinclair 15%