We want to bring to your immediate attention a significant update from Chevron that may impact our California crude oil market dynamics and existing contractual agreements.
Effective January 1, 2025, Chevron will no longer post California domestic crude prices on its website. This announcement appeared on Chevron’s daily California postings on October 23, 2024.
This change introduces uncertainty, as it is unclear if Chevron will discontinue all California crude oil postings or simply eliminate the webpage. However, if Chevron ceases postings altogether, it could void virtually all crude oil purchase/sale agreements based on their California prices, requiring widespread renegotiation under different terms.
In addition, with Phillips 66 planning to shutter the Wilmington refinery by the end of 2025, we anticipate that Union 76 will follow by discontinuing postings for California crude. This could leave CRC (formerly GreenGate) as one of the few remaining sources, narrowing the “four-poster average” basis traditionally used in our market.
If Chevron and other companies stop California postings, many contracts in California will require restructuring, likely using WTI as a basis instead of the current four-poster average. This shift may become necessary for securing purchase and sale agreements in 2025 and beyond.
We urge all members to review their agreements and prepare for potential renegotiations.
As the market landscape changes, our team will continue to monitor these developments and provide updates. Additionally, the Independent Producers Exchange (IPEX), a subsidiary of CIPA, markets crude and can help small companies obtain favorable contracts.