In a move that’s reigniting debates over energy security, environmental risks, and California’s fraught relationship with fossil fuels, Sable Offshore Corp. has secured federal approval to restart its Las Flores Pipeline System off the Santa Barbara coast. The decision, handed down by the Pipeline and Hazardous Materials Safety Administration (PHMSA) in late December 2025, allows the company to resume operations on the notorious Lines 901 and 903—pipelines shuttered since the 2015 Refugio oil spill that dumped thousands of barrels of crude into the Pacific Ocean.
This green light comes amid ongoing lawsuits from environmental groups and pushback from state regulators, who argue the restart prioritizes profits over safety.
The timing couldn’t be more charged. California is grappling with a self-inflicted energy squeeze as major refineries shutter, slashing the state’s refining capacity by an estimated 17-20%. But can Sable’s revived pipeline inject enough crude to stem the tide, or is this a symbolic win in a state hell-bent on phasing out oil? Let’s break it down, from the pipeline’s throughput to its ripple effects on refineries, investors, and everyday consumers.
The Refinery Crunch: A 17-20% Capacity Hit
California’s refining landscape is undergoing a seismic shift. Two major players—Phillips 66 and Valero—are set to close facilities, representing a combined loss of about 17.5% of the state’s in-state refining capacity.
Phillips 66’s Los Angeles refinery complex (in Carson and Wilmington) alone processes around 139,000 barrels per day (bpd), while Valero’s potential exit adds to the pain.
Overall, the Golden State’s total refining capacity, hovering around 1.7-1.8 million bpd, could drop by 300,000 bpd or more by 2026.
These closures stem from a mix of factors: Governor Gavin Newsom’s aggressive push toward renewables, declining demand for gasoline amid EV adoption, and skyrocketing operational costs in a state with some of the nation’s strictest environmental regs.
The result? Tighter gasoline supplies, with experts warning of pump prices surging past $5—or even $12 per gallon in extreme scenarios.
California already imports a hefty chunk of its refined products from out-of-state, and losing this capacity could exacerbate reliance on foreign crude, heightening vulnerability to global disruptions.
Sable’s Pipeline: How Much Crude Can It Deliver?
Enter Sable Offshore, the Houston-based firm that acquired ExxonMobil’s Santa Ynez Unit (SYU) assets in 2024. The SYU encompasses three offshore platforms—Harmony, Heritage, and Hondo—plus the onshore Las Flores Canyon processing facility and the 124-mile pipeline network.
Production at the SYU restarted in May 2025, but full pipeline operations were stalled until PHMSA’s nod.
At its peak before the 2015 shutdown, the SYU churned out around 45,000 barrels of oil equivalent per day (boe/d).
Sable’s current guidance pegs net average daily production at 45,000-55,000 boe/d (on a 100% working interest basis), with an expected annual output of about 23 million barrels.
That’s mostly heavy crude, ideal for California’s specialized refineries. The pipeline itself—comprising Line 324 (10.8 miles) and Line 325 (113 miles)—has been upgraded and is now cleared for restart, though environmentalists question its integrity.
This volume represents a potential 15% boost to California’s domestic crude production, which has been in freefall (down to roughly 150,000 bpd statewide).
But it’s a drop in the bucket compared to the state’s 1.5+ million bpd consumption.
Which Refineries Does It Feed, and Will It Keep Them Open?
The Las Flores system funnels crude from the Gaviota coast eastward, connecting to larger networks that supply refineries in the Los Angeles basin and beyond.
Key destinations include LA-area facilities like those operated by Marathon and Chevron, which process heavy California crudes.
Historically, SYU oil has fed into the broader California market, helping maintain utilization rates at in-state plants.Will this keep the main pipelines open? The restart directly revives the Las Flores lines, which could indirectly support interconnected systems like those in Kern County by bolstering overall supply.
However, it won’t magically sustain the closing refineries—those decisions are baked in, driven by policy rather than supply shortages.
As for staving off further closures: No. Sable’s 50,000 bpd influx might help the remaining refineries run more efficiently by displacing pricier imports, but it’s insufficient to offset the 300,000 bpd capacity loss.
Critics argue the oil could even end up exported if state hurdles persist, negating local benefits.
What Does This Mean for Investors?
For energy investors, Sable’s win is a boon amid uncertainty. The company’s shares surged 30% post-approval, reflecting optimism over near-term production ramps and revenue from first sales (eyed for Q4 2025).
With 646 million barrels of contingent resources, SYU offers low-decline, high-margin plays in a mature basin.
Broader implications? It signals a federal pushback against California’s anti-oil stance under the Trump administration, potentially opening doors for other offshore projects.
Risks abound, though: Lingering lawsuits, state interventions, and volatile oil prices could derail timelines.
Investors in downstream players like Chevron might see stabilized feedstocks, but refinery owners face ongoing margin squeezes from EV transitions.
Climate Groups Suing to Stop the Re-opening
The only winners in the climate lawfare from climate groups are the attorneys.
There are multiple pending lawsuits in California aimed at stopping or delaying Sable Offshore from restarting oil operations, particularly involving the Santa Ynez Unit and associated pipelines off the Santa Barbara coast. These include both state and federal cases, with some directly challenging recent federal approvals that could enable the restart.
Here’s a summary of the key ongoing ones based on available information:
Environmental Defense Center et al. v. Pipeline and Hazardous Materials Safety Administration (PHMSA) et al.: Filed in late December 2025 in the U.S. Ninth Circuit Court of Appeals. Plaintiffs (including the Environmental Defense Center, Center for Biological Diversity, Sierra Club, and Santa Barbara Channelkeeper) are suing federal agencies under the Trump administration for granting an “emergency special permit” on December 22, 2025, that approved the pipeline restart without required environmental reviews, public input, or safety assessments under the Pipeline Safety Act and National Environmental Policy Act. They claim the approval disregards risks highlighted by the 2015 Refugio oil spill and lacks justification for a “national energy emergency.” Status: Ongoing, with plaintiffs requesting an emergency stay to block the approval; opening briefs are due January 26, 2026. A related request for a stay was denied by the Ninth Circuit on December 31, 2025, but the underlying lawsuit proceeds.
Center for Biological Diversity et al. and Environmental Defense Center et al. v. California Office of State Fire Marshal (OSFM) (Santa Barbara County Superior Court, Case No. 25CV02244): Filed in April 2025, challenging the OSFM’s waiver of cathodic protection requirements for the pipelines without environmental review. A preliminary injunction was granted in July 2025, preventing the actual restart of the pipelines but allowing preparatory steps. Status: Ongoing as of November 2025, with the injunction still in effect unless superseded by recent federal actions.
Central Coast Regional Water Quality Control Board v. Sable Offshore Corp. (Santa Barbara County Superior Court): Filed on October 3, 2025, alleging unauthorized waste discharges (e.g., sediment and debris into waterways) during pipeline repairs tied to the restart efforts, violating state water quality laws. Penalties could reach $5,000 per day per violation. Status: Ongoing, with no reported resolution.
Center for Biological Diversity et al. v. Bureau of Safety and Environmental Enforcement (BSEE) (U.S. District Court, Central District of California, Case 2:25-cv-02840): Filed in 2025, challenging the renewal of federal offshore leases without adequate environmental reviews under NEPA and the Endangered Species Act. This could impact the restart by questioning the validity of the underlying operations. Status: Ongoing as of November 2025, with court proceedings on lease extensions.
Other related cases, such as Sable’s own lawsuits against the California Coastal Commission and Santa Barbara County for blocking permits and repairs, are also ongoing and indirectly affect the restart timeline through injunctions and appeals. For instance, a state court injunction from May 2025 blocks certain repairs under the Coastal Act.
Despite the federal appeals court’s recent denial of a stay, these lawsuits continue to pose legal hurdles, and environmental groups are actively pursuing blocks on the grounds of safety and environmental risks. Note that the situation is evolving rapidly, with potential for new developments post-December 2025.
And for Consumers?
Californians, already paying the nation’s highest gas prices, could see modest relief. Sable touts the restart as a way to “stabilize supply and lower consumer gasoline prices” by adding domestic crude and reducing import costs.
Analysts estimate it could shave a few cents off the pump, especially if refinery closures drive spikes.
But skeptics counter that global markets dictate prices more than local supply, and environmental costs (like spill risks) could outweigh savings.
In the end, Sable’s restart is a Band-Aid on California’s energy wounds—welcome volume in a tightening market, but far from a cure for refinery woes or the state’s green ambitions. As lawsuits loom and production ramps, watch for price volatility and political fireworks. Too little too late? For some refineries, yes. For California’s oil patch, it might just be the spark it needs.
On January 1st, it is a hopeful start to the new year.
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