Sable Finds Buyers for Its Oil, but California’s Refinery Decline Looms

The project off the Santa Barbara coast includes the Hondo, Harmony and Heritage platforms and onshore infrastructure. Its route to market was severed in May 2015, when Plains All American’s Line 901 pipeline ruptured near Refugio State Beach, spilling almost 3,000 barrels of crude. ExxonMobil later sold the assets to Sable in 2024 for total consideration of $643 million. After years of regulatory disputes and court orders, Sable said it restarted Harmony production in May 2025; California officials disputed that account, describing the activity as well testing.

Federal action helped clear the pipeline route. In December 2025, the Pipeline and Hazardous Materials Safety Administration reclassified the onshore lines as interstate infrastructure at Sable’s request and approved a restart plan on Dec. 22. On March 13, after the US-Iran conflict began in late February 2026, Energy Secretary Chris Wright invoked the Defense Production Act to direct restoration of operations, citing supply risks and military dependence on foreign oil. Shipments resumed the next day. California’s Democratic administration has challenged both interventions, and Sable CEO Jim Flores said on an earnings call that rulings upholding federal authority, including PHMSA’s jurisdiction, are under appeal at the Ninth Circuit.

For a time, Chevron was Sable’s only customer. Its suspension of purchases in early October for refinery maintenance and storage-tank upgrades helped drive Sable shares down by more than half on November 9, to a record low of 76 cents at one point. The company warned of substantial doubt about its ability to continue as a going concern. Management later said all four major Los Angeles-area refineries were taking its crude after Sable secured three additional buyers, including Marathon and PBF Energy. But those arrangements began with starter volumes. Sable was seeking a bulk sale of up to 1.3 million barrels to cover a Q4 spending budget of $165 million to $175 million, including debt payments. It had $38 million in cash at the end of September and listed a $100 million unsecured loan basket and a possible private share placement as fallbacks.

The crude itself narrows the market. Santa Ynez oil is heavy and sulfur-rich, at around 15-20°API and 4-5% sulfur. Management has acknowledged ample competing heavy-crude supply, with walk-up pricing about $30 a barrel below Brent. Sable expects Hondo’s lighter, sweeter output to improve the blend; about 10,000 b/d was forecast from the platform in December. Higher production, however, would also mean more oil to sell and more pressure on storage at Las Flores Canyon and along the pipeline, where October crude was already being held.

California’s oil production averaged roughly 245,000 b/d through August 2026, down from about 550,000 b/d in 2015. The state has also lost conventional refining capacity as plants operated by Marathon, Phillips 66 and Valero closed or converted to renewable fuels. Its July 2026 refinery listing showed 11 facilities with combined crude-processing capacity of approximately 1.34 million b/d. Valero’s 145,000 b/d Benicia plant shut this spring. A smaller refining system needs less crude, even as California continues to rely on imports.

Seaborne crude imports to California averaged around 890,000 b/d in 2026, compared with 1.04 million b/d last year. Alaskan North Slope crude remained a major source, at around 200,000 b/d in March-October 2026. War-related disruptions to Middle Eastern supplies—which made up 35% of foreign crude imports in 2025—were partly offset by barrels from Brazil, Guyana and Ecuador. In October 2026, Latin American crude accounted for 72% of the state’s oil imports. The declining import total reflects not only supply disruption or greater self-sufficiency, but also a shrinking need for refinery feedstock.

California’s dependence is shifting toward finished fuels. Clean-product imports averaged 270,000 b/d in March-April, the first two months of the US-Iran conflict, an all-time high. Volumes later eased somewhat with the return of the El Segundo refinery, but the state remains reliant on refined products from South Korea. A temporary Jones Act waiver allowing Gulf Coast shipments on non-US-flagged vessels is due to expire on November 15. The waiver enabled a record 70,000 b/d flow to PADD 5 in May-October, mostly gasoline and blending feedstocks; US maritime groups are urging the White House to let it lapse. California has no pipeline connections to Gulf Coast refineries, making maritime supply important.

Sable is considering an offshore storage and treating vessel so shuttle tankers could carry its crude to domestic or international buyers. A February filing put the project’s cost at about $475 million, subject to regulatory clearances. It could broaden the company’s market and reduce reliance on disputed onshore infrastructure, but would require approvals, investment and buyers willing to account for the extra logistics and difficult-to-handle crude. Congressional oversight may add scrutiny, while courts pose a more direct challenge to the pipeline’s legal basis. Federal intervention reopened the route; it cannot ensure California refineries will keep buying Sable’s oil or that the company can finance the wait.