Chevron said the decision to buy from the embattled Sable was the result of a severe supply shortage stemming from the war in Iran and California’s tough restrictions on oil production.
David Paul Morris/Bloomberg
Chevron plans to buy oil from Sable Offshore, a Houston company whose pipeline and platform offshore Santa Barbara have been caught in a power struggle between the Trump administration and environmentalists and regulators in California.
Chevron said the decision to buy from the embattled Sable was the result of a severe supply shortage stemming from the war in Iran and California’s tough restrictions on oil production. With the closure of the Strait of Hormuz cutting off the shipping route for 20% of the world’s petroleum trade, companies in Asia that typically supply Chevron’s California refineries with crude are now unable to do so, Chevron said.
“California just doesn’t have enough fuel and it doesn’t have enough product over the next few months,” said Ross Allen, a Chevron spokesman.
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News of Chevron’s interest in Sable’s production follows a wartime intervention earlier this month from the Trump administration that directed Sable to restart production — in spite of California’s regulatory proceedings. Energy Sec. Chris Wright issued the order under emergency powers provided under the Defense Production Act.
A leak from the pipeline in 2015 caused one of the worst oil spills in California’s history, dumping more than 140,000 gallons of oil and killing marine wildlife. The company has unsuccessfully sought permits for the pipeline, platforms, and processing facility since it purchased from Exxon Mobil in 2024.
Sable is also fending off shareholder lawsuits and insider trading allegations.
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The deal between Sable and Chevron includes an initial 20,000 barrels a day from Sable’s facility for use at Chevron’s El Segundo refinery near Los Angeles, according to a report from Bloomberg that Chevron declined to confirm.
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The oil giant has two California refineries near San Francisco Bay and Los Angeles. It is responsible for providing 60% of the jet fuel in the Bay Area, and as much as 40% in southern California.
There may be other options for Chevron moving forward, the company said. For it to get oil from Texas to feed its California refineries – instead of from Sable – the crude would have to make its way through the Panama Canal or around South America, Allen said.
The company is “definitely looking to do that to top up,” but only because the administration, in another effort to ease trade disruptions, made it easier to do so by temporarily waiving a U.S. law that requires all goods transported between U.S. ports to be carried by U.S.-registered and owned ships.
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“This is an emergency,” Allen said.
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The administration has repeatedly stepped in on Sable’s behalf. First, with social media support and then to claim jurisdiction over the pipeline in December.
The decision from the Trump administration to command production from Sable earlier this month was met with backlash from California regulators and environmental groups. The company was still under an injunction from a federal judge to give notice to the court and wait 10 days before restarting pipeline operations.
“The cynical misuse of a national security law for the benefit of an oil company that has repeatedly broken the law is a shocking development, even from this administration,” Brady Bradshaw, senior oceans campaigner at the Center for Biological Diversity, said in a statement.
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Sable is expected to return to court in April as a result of violating that injunction.
Sable stock rose by more than 6% Tuesday evening.