Energy companies are locked in a high-stakes competition to build a major fuel pipeline to the U.S. West Coast, a critical project that could stabilize the region's notoriously volatile gasoline prices. 

The push is fuelled by the planned closure of two California refineries, which threatens to significantly strain the isolated market's fuel supply.

West Coast drivers already face some of the nation's highest fuel costs due to limited local production and minimal pipeline connections to the large Gulf Coast refining hub. 

According to the Energy Information Administration, no pipelines deliver fuel to California across the Rocky Mountains, and only a few connect the Gulf Coast to the West Coast.

This supply vulnerability is set to worsen as Phillips 66's Los Angeles plant winds down, and Valero Energy's Benicia refinery plans to close in April. These closures will create a supply gap of nearly 280,000 barrels per day, creating a rare and lucrative opportunity for pipeline developers.

Three groups have tabled proposals to fill this void: refiner HF Sinclair, a unit of pipeline operator ONEOK, and a partnership between refiner Phillips 66 and midstream giant Kinder Morgan.

Analysts believe that because waterborne imports are an alternative supply source, the market can likely only sustain one new pipeline, meaning the first group to secure a final investment decision will likely claim a potential multi-billion-dollar windfall.

The planned refinery closures have put pressure on California Gov. Gavin Newsom to prevent a consumer price surge, creating a window for approval for a new fossil fuel project despite the state's traditional resistance to "Big Oil."

East Daley analyst Alec Gravelle noted, "Given the backlash to refinery closures, it's hard to imagine much resistance to new projects."

Securing capacity commitments—which typically finance most of a pipeline—will be the deciding factor. 

HF Sinclair and the Phillips 66-Kinder Morgan partnership, known as Western Gateway, may have an advantage as the refiners involved could guarantee some of the necessary capacity, according to Scotiabank analyst Paul Cheng. 

Projects that reuse existing lines, a component of both the Western Gateway and HF Sinclair plans, also face easier regulatory approval, said Debnil Chowdhury of S&P Global Commodity Insights.