Core Insights - A competitive race is emerging among energy companies to construct a significant fuel pipeline to the U.S. West Coast, driven by the impending closure of two California refineries which may lead to soaring gasoline prices in the region [1] Industry Overview - Motorists in West Coast states have historically faced some of the highest fuel prices in the U.S. due to limited regional production and minimal connectivity to the Gulf Coast refining hub [2] - The closures of Phillips 66's Los Angeles plant and Valero Energy's Benicia refinery threaten to create a supply gap of nearly 280,000 barrels per day, presenting an opportunity for pipeline operators [3] Competitive Landscape - Three groups have proposed different projects to address the supply void created by the refinery closures, including HF Sinclair, ONEOK, and a partnership between Phillips 66 and Kinder Morgan [3] - The first group to finalize an investment decision may secure a multi-billion-dollar opportunity, as multiple pipelines could negatively impact each other's margins [4] Political Environment - The planned refinery closures have intensified pressure on California's Governor to prevent fuel price surges, potentially facilitating the approval of new fossil fuel projects in a state traditionally opposed to "Big Oil" [5] Financing and Capacity Commitments - Securing at least 70% of the proposed projects' capacity is crucial for financing, giving an advantage to the Phillips 66-Kinder Morgan project and HF Sinclair's proposal [6] - None of the proponents have announced any capacity commitments yet, and proposals that reuse existing lines may have a better chance of regulatory approval [7][8] Market Dynamics - Refining executives express skepticism about the construction of new pipelines, citing California's access to waterborne fuels as a more favorable option due to timing and transportation costs [9] - Valero Energy's COO indicated that the company is unlikely to enter long-term shipping arrangements with any of the proposed projects, favoring waterborne options for sourcing barrels globally [10][11]