Sky Quarry Inc. (SKYQ) has begun producing refined petroleum at its Eagle Springs Refinery in eastern Nevada, completing a restart that returns the facility to active service. The company's stock climbed 2.32% to $2.2101, pulling back from an intraday peak near $2.60. With the plant operating again, Sky Quarry now aims to increase output and begin commercial sales as regional diesel prices strengthen.

Nevada Refinery Moves Into Active Production

Foreland Refining Corporation, Sky Quarry's wholly owned subsidiary, operates the facility near Ely. The refinery produces diesel, distillates, vacuum gas oil, naphtha, and liquid paving asphalt. These products serve transportation, refining, industrial, and road construction markets across the West.

The return to production followed a sequence of regulatory and operational steps. Sky Quarry secured its Nevada air permit in September, then completed repairs and upgrades at the plant before restarting operations and beginning petroleum production. Management reports that the facility is running as expected following those preparations.

Eagle Springs is Nevada's only crude oil refinery, with capacity of approximately 5,000 barrels per day — a small footprint by national refining standards, but the state's sole in-state source of refined fuel. Nevada otherwise draws most of its motor fuel from refineries in neighboring states, so a functioning local plant gives the region a direct supply of diesel and asphalt rather than depending entirely on product shipped in over long distances. The refinery's location provides access to crude from Nevada, Utah, and nearby producing areas, and onsite storage and handling systems support a range of feedstocks and refined petroleum products.

Diesel Pricing Strengthens the Market Backdrop

Improving diesel economics have strengthened the commercial outlook for the newly restarted refinery. Crack spreads — the gap between a refined product's wholesale price and the cost of crude — are a standard industry gauge of refining economics. On October 21, Salt Lake City benchmarks indicated diesel crack spreads of $133 to $136 per barrel. The comparable January figure stood near $33 per barrel, an increase of approximately 300%.

Sky Quarry based its calculations on wholesale diesel rack prices and December West Texas Intermediate futures. The lower wholesale diesel benchmark stood near $231 per barrel in October, though the rack prices and the futures quote were drawn from different observation times.

Because these spreads are derived from market-wide benchmarks rather than actual sales, they do not reflect Quarry's real refining margins. Profitability depends on feedstock costs, transport, operating expenses, product yields, and realized sales prices. The Energy Information Administration, meanwhile, expects above-average diesel crack spreads to persist through 2027.

Sky Quarry Targets Higher Throughput and Sales

Sky Quarry intends to gradually raise throughput at Eagle Springs as operations progress. The company is seeking steady equipment performance, additional crude supplies, better yields, and broader sales agreements — steps that would support wider fuel distribution across the Intermountain West. Sustained run rates, crude purchase arrangements, and the first commercial sales contracts are the tangible checkpoints that will indicate how far the restart has progressed.

The refinery's product slate offers flexibility across several end markets. Diesel serves transportation, agriculture, mining, and industrial customers, while liquid paving asphalt supports road construction. Vacuum gas oil provides feedstock for other refiners, and naphtha supports blending and industrial uses. This range allows the company to adjust its product mix in response to supply conditions and regional prices.

Management continues to evaluate additional crude oil sources in neighboring producing regions. The company may eventually connect refinery sourcing with its PR Spring development in Utah. Sales growth, in the meantime, depends on achieving higher volumes, maintaining reliable operations, and seeing sustained commercial demand for finished products.