Sky Quarry is converting Nevada’s only refinery into a sustainable aviation fuel hub, boosting fuel security and decarbonization efforts.
Nevada's sole operating refinery, owned by Sky Quarry Inc., is undergoing a strategic transformation to focus on sustainable aviation fuel (SAF), a move driven by a tightening U.S. refining market, growing demand for low-carbon fuels, and Nevada's vulnerability to fuel supply disruptions. This pivot signifies a broader shift in the energy and aviation industries towards decarbonization and enhanced regional fuel resilience.
On May 7, 2026, Sky Quarry Inc. executed a non-binding Memorandum of Understanding (MOU) with Southern Energy Renewables Inc., a developer of carbon-negative fuels, and DevvStream Corp., a carbon-management company. This collaboration aims to evolve Sky Quarry's Foreland Refinery in Railroad Valley, Nevada, into a "next-generation fuel production hub" for SAF and specialty fuels. The agreement also includes developing a pilot-scale validation pathway for SAF at Sky Quarry's PR Spring development in Utah. The Foreland Refinery, with a permitted capacity of approximately 5,000 barrels per day, traditionally produces diesel, vacuum gas oil, naphtha, and liquid paving asphalt. This transition comes after the refinery experienced production outages in late 2025 and the first quarter of 2026 due to boiler repairs, with operations expected to resume around June 2026.
The impetus for this "jet-fuel makeover" stems from several critical factors. The U.S. West Coast is experiencing a shrinking refining capacity as older plants close and major refiners prioritize discipline over expansion. Simultaneously, there's a significant policy push towards domestic and lower-carbon fuel production, with the U.S. government flagging domestic refining as a strategic priority. The market for sustainable aviation fuel is rapidly repricing due to increasing demand from airlines and passengers seeking to reduce their carbon footprints.
Nevada's high dependence on California for nearly 86-88% of its transportation fuels exacerbates its fuel insecurity. Recent and planned closures of major refineries in California, such as Phillips 66's Los Angeles facility and Valero's Bay Area refinery, have reduced California's refining capacity and raised concerns about potential fuel shortages and price spikes in Nevada. Nevada currently has limited crude oil reserves and its only crude oil refinery (Foreland) was previously restricted to asphalt production, leaving the state vulnerable to supply disruptions.
The consequences and impacts of this shift are multi-faceted. Economically, the move promises job creation, with other SAF facilities in Nevada, like Edgewood Renewables, projecting 60-70 high-paying, skilled jobs. This diversification could enable Southern Nevada to become more self-sustaining in fuel production. However, Sky Quarry, as a micro-cap company, faces challenges related to funding and execution to fully realize its ambitious SAF production goals.
Geopolitically, the conversion enhances Nevada's fuel resiliency by diversifying its supply sources and reducing its reliance on California. In a supply-constrained Western market, a permitted refinery with low-carbon fuel capabilities gains significant strategic value. From an industry-specific perspective, this transformation underscores the aviation sector's commitment to decarbonization through SAF. It highlights innovation in fuel production, utilizing recycled hydrocarbons and waste-to-oil feedstocks. The broader SAF market is experiencing substantial investment, driven by an estimated demand for over 3 billion gallons per year by 2030. However, the success of SAF projects heavily relies on continued policy support and robust project financing.
