Jones-Act Waiver Helps US West Coast Fuel Supply as Refiners Mull Product Pipeline Proposals

With the Middle East conflict showing no signs of abating anytime soon, U.S. West Coast refiners said the Jones Act waiver will continue to help fuel supply into California from out-of-state refineries as they evaluate long-term refined product pipeline proposals to alleviate the region’s chronic shortages.

At Valero Energy’s second-quarter earnings call Thursday, Chief Operating Officer Gary Simmons called the White House’s waivers to the Jones Act requirements “critical” for the East Coast (PADD 1) and West Coast (PADD 5), saying the company was shipping barrels from its 301,000 b/d Corpus Christi,
Texas, refinery to the West Coast to “keep the market supplied.”

Randy Hawkins, Valero’s vice president of crude and feedstocks supply, also said during the call that the idling of the San Pablo Bay pipeline — which typically moves Central California’s San Joaquin Valley crude oil into the San Francisco Bay Area — is forcing those barrels to move to Los Angeles refineries.

“With these logistics bottlenecks, we have seen prices for California crude weaken considerably, and we’ve been working with our Wilmington refinery (in
Los Angeles) to increase processing rates of these barrels and anticipate … record levels of these crudes in the coming months,” Hawkins said.

The San Pablo Bay pipeline is close to being sold to California Resources Corp., pending state approval, OPIS previously reported.

Also on Thursday, PBF Energy Chief Executive Matt Lucey said at the company’s earnings call that he estimates roughly 5 million b/d of refined products are trapped inside the Middle East due to the effective closure of the Strait of Hormuz oil supply chokepoint.

Lucey said that it has been more difficult for the U.S. markets to receive imports that they have historically relied on.

“The West Coast and East Coast are structurally short on refining capacity and depend on imports, often from less stable sources to balance. The temporary Jones Act waivers are helping in this regard,” he said.

California had already experienced fuel supply disruptions well before the start of global shortages related to the Middle East conflict, which further hiked shipping costs for imports, Lucey said.

Lucey said that PBF has been working together with California regulators and politicians, adding that the company’s M-70 pipeline — supplying Central California crude to its 166,200 b/d Torrance refinery — has increased throughput from 60,000 b/d to about 90,000 b/d, with more room available.

In addition, PBF Head of Refining Mike Bukowski said the company’s 157,000 b/d Martinez, Calif., refinery, has returned to full operations following a fire in February 2025. He added that a hydrocracker at Martinez will undergo turnaround in Q3, with its completion expected in October.

PBF has also reached an agreement with Air Products to repurchase two hydrogen plants for its Torrance refinery, Bukowski said.

“The hydrogen plants in Torrance are heavily integrated into the operation of the refinery,” Bukowski said, “and we feel that owning and operating those assets will improve the overall reliability of Torrance, as we will be able to closely manage operating details and coordinate maintenance and turnarounds with the rest of the refinery as a whole.”

Several refined product pipeline proposals to bring fuel into California and the West Coast also gained momentum this week.

During HF Sinclair’s earnings call Tuesday, Chief Operating Officer Steven Ledbetter said the company is proceeding with its strategic multi-phased project, with the first phase expected to add roughly 35,000 b/d of refined product supply into Nevada in 2029. The company is advancing toward a final investment decision on the first phase of the project this year, Ledbetter said.

“Ultimately we do see that the reason we’re doing this is the tightness in PADD 5 that’s continuing to get short, and we have advantages logistically in terms of production in the Rockies,” Ledbetter said.

“Longer term, we think we can hit larger markets out in the West, including California,” he said.

The HF Sinclair project comes on the heels of positive announcements for the Western Gateway Pipeline, a joint venture between Kinder Morgan and Phillips 66 that will connect Midwest and Gulf Coast refinery supply to Phoenix and California markets.

–Reporting by Shaheer Naveed, snaveed@opisnet.com; Editing by Frank Tang, ftang@opisnet.com