Huge breakthrough for California gas as oil giant buys critical pipeline that links network of refineries

A California oil giant is set to buy a critical pipeline between Kern County’s oil fields and Bay Area refineries that has been shuttered for months.

California Resources Corp. purchased about 2,000 miles of pipeline from Denver-based CorEnergy Infrastructure Trust Inc, and plans to reopen the route that has been closed since December.

The $63 million deal will allow CRC to transport up to an additional 400,000 barrels of crude oil per day and reopening work could start as early as October 1.

A lone pumpjack is located in the middle of a large solar array outside of Bakersfield, Kern County, California, on Friday, October 22, 2021. (Universal Images Group Editorial) UCG/Universal Images Group via Getty Images

The deal is not final as the California Public Utilities Commission will need to give them permission to proceed.

The company asked for its approval on June 16 to buy some of the assets, with the CPUC set to hold a vote on Thursday.

CRC’s president and chief executive officer expressed confidence the purchase will enhance their position as one of the state’s leading energy providers.

“This transaction further strengthens CRC’s position as California’s leading integrated infrastructure energy platform,” Francisco Leon, President and Chief Executive Officer of CRC, said.

“This diversified midstream network will enhance our ability to efficiently deliver California-produced barrels directly to the highest-value markets, while increasing operating flexibility and flow assurance across our portfolio. Importantly, these strategic, difficult-to-replicate assets further strengthen our California-focused strategy and support durable long-term value creation,” he added.

The purchase is expected to benefit Central Valley oil producers, who are intrigued by the possibilities.

Francisco J. Leon, CEO of California Resources Corporation. California Resources Corporation

“I’m very loyal to my current refiner, but I’m definitely going to wait and see what happens to the differentials,” Kern County oilman Chad Hathaway told Bakersfield.com.

The CRC said the purchase would be “reducing exposure to constrained outlets and pricing discounts while supporting California jobs, royalty revenues and the reliable delivery of locally produced energy.”

CRC’s purchase could benefit a struggling energy industry in California that has been restrained at times by state policies.

Consumers in California pay some of the highest utlity costs in the nation — and it’s set to get worse.

Pacific Gas & Electric’s 16 million customers may see fees spike by as much as $840 by 2030, according to a forecast from California Public Utilities Commission’s Public Advocates Office this week.

The current average cost for gas and electricity is $285 per month — or about $3,420 per year — which is an 84% increase since 2016 figures.

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