West Coast Refinery Closures Force ConocoPhillips (COP) to Rethink Crude Routes

West Coast refining retreat forces upstream rethink

A recent wave of refinery closures in California is prompting oil and gas producers such as ConocoPhillips to reassess how they route crude and deliver refined products to the U.S. West Coast. Major refiners are exiting or shrinking their California footprints, reducing local processing capacity and increasing reliance on inventories and imports to meet state demand. The shift alters the balance between upstream production and downstream refining capacity that companies like ConocoPhillips must manage to keep supply chains resilient.

Valero’s abrupt shutdown of the Benicia refinery, originally slated to cease production in April 2026 but taken offline in late January, alongside closures at Wilmington and other sites, removes substantial regional processing capacity. Wilmington’s 135,000 barrels-per-day and Benicia’s roughly 170,000 b/d represent meaningful volumes that previously supported Southern California asphalt and motor fuel markets. Valero says it continues to serve the state through existing inventories and increased imports, but producers and midstream operators face longer-haul logistics and altered crude demand patterns as a consequence.

For ConocoPhillips and its peers, the withdrawals create practical choices: secure alternative outlets for domestic crude, expand use of terminals and rail or marine shipments, or deepen partnerships with remaining refiners and importers. The evolving refining map raises questions about product availability and distribution costs on the West Coast, and could prompt upstream firms to adjust contracting, storage investments and shipping routings to mitigate outages and congestion at ports and terminals.

Regulatory and financial pressures

Industry executives point to heavy asset write-offs and mounting regulatory costs as central drivers of the pullback. Valero records about $1.1 billion of write-offs tied to Benicia and Wilmington in the first quarter of 2025, and its CEO attributes the move in part to California’s regulatory environment that discourages investment in refining.

Regional shutdowns and supplier shifts

The retreat follows Phillips 66’s cessation of operations at its Los Angeles refineries in the fourth quarter of 2025, which affects sites that span roughly 650 acres and employ some 600 people. Chevron is also reducing its California footprint, moving its headquarters to Houston after more than a century in the state, even as its Richmond and El Segundo refineries continue to supply a broad network of retail outlets.