Sky Quarry Predicts Fuel Shortage in Nevada as California Refinery Shutdowns Spark Supply Concerns

Rhea-AI Summary

Sky Quarry (NASDAQ: SKYQ) forecasts potential fuel shortages in Nevada amid regional supply disruptions and regulatory challenges. The company's analysis reveals critical concerns following California refinery shutdowns, including the Martinez facility (9.64% of state capacity) and Phillips 66's planned closure (9% reduction). California currently supplies 88% of Nevada's and 33% of Arizona's fuel needs.

Key factors contributing to the shortage include:

• Nevada imports approximately 150,000 barrels of transportation fuel daily
• Martinez refinery's restart in Q2 2025 at 50% capacity
• California's new ABX2-1 law affecting inventory management
• 59% of California's crude oil is imported
• Growing industrial demand in Nevada

As Nevada's only crude oil refinery, Sky Quarry's Foreland Refinery plans to increase its 4,500-5,000 barrel-per-day capacity in 2025 to help address the supply gap and capitalize on rising refining margins.

Positive

• Only operating refinery in Nevada, positioning company to capture market share
• Plans to increase production capacity to meet growing demand
• Potential for higher refining margins due to supply constraints
• Strategic advantage from California refinery closures reducing regional competition

Negative

• Currently operating below full capacity
• production capacity of 4,500-5,000 barrels per day compared to regional demand
• Potential impact from proposed tariffs on imported crude oil could affect input costs

News Market Reaction

+0.67%

1 alert

+0.67% News Effect

On the day this news was published, SKYQ gained 0.67%, reflecting a mild positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

Company Prepares to Ramp Up Production to Help Keep Nevada Fueled

WOODS CROSS, Utah, March 12, 2025 (GLOBE NEWSWIRE) -- Sky Quarry Inc. (NASDAQ: SKYQ) ("Sky Quarry" or "the Company"), an integrated energy solutions company committed to revolutionizing the waste asphalt shingle recycling industry, is forecasting a potential fuel shortage in Nevada. Sky Quarry reached this conclusion after conducting research prompted by the surge of inquiries to secure long term fuel supply from Nevada market participants. Sky Quarry believes that the potential fuel shortage will be caused by market challenges including production disruptions in the region (specifically California), supply constraints driven by regulatory action and long-term historical uptrends in demand. The potential impact of tariffs on imported oil may also have a significant impact because both Utah and California purchase crude internationally.

With Nevada importing approximately 150,000 barrels of transportation fuel daily and California supplying about 88% of Nevada’s and 33% of Arizona’s fuel needs, recent setbacks, such as the explosion and shutdown of the Martinez refinery in Northern California, along with other pending closures like Phillips 66, are tightening supply and threatening the region’s fuel stability. According to the California Energy Commission, Martinez accounts for 9.64% of the state’s refining capacity. A recent Zacks Research report confirms that while the facility’s owners plan to restart operations in Q2 2025, production will initially be limited to 50%, with full capacity expected by year-end. The situation is set to worsen as Phillips 66 plans to cease operations at its Los Angeles-area refinery by late 2025, further reducing California’s refining capacity by 9%.

Adding to the uncertainty, California's recently enacted ABX2-1 law, aimed at curbing gasoline price spikes, could further reduce the state’s refinery output or willingness to sell fuel into Nevada. Often referred to as a “gasoline island” due to its lack of multistate logistics networks and pipeline infrastructure, California is particularly vulnerable to supply shocks. The law specifically mandates that refiners maintain high levels of inventory to reduce the potential for price spikes. This law could have a significant impact on fuel availability in Nevada and Arizona as the law “may artificially create shortages in downstream markets” ¹

Proposed tariffs on imported crude oil could further tighten supply and contribute to rising fuel prices across the West. California, and by extension, Nevada and Arizona, currently imports 59% of its crude oil, fuels and blend feedstocks from outside the US, which averaged 850,000 barrels daily in 2022.²

Additionally, the Nevada fuel market is tightening as demand rises, driven by expanding industrial sectors like mining, which are crucial to the state's economy and expected to grow further in 2025.

As the only crude oil refinery in Nevada, Sky Quarry’s Foreland Refinery is uniquely positioned to help bridge this anticipated fuel supply gap. Currently operating below full capacity, the company plans to ramp up production in 2025, utilizing its 4,500-5,000 barrel-per-day refining capacity to stabilize the regional fuel market and capitalize on rising refining margins.
        
"The delicate balance of California’s refining infrastructure is being tested by major supply disruptions, creating a highly favorable environment for our growing operations in Utah and Nevada," said David Sealock, CEO of Sky Quarry. "As the only refinery in Nevada, we believe Sky Quarry will play a critical role in stabilizing the regional fuel supply. With our finger on the pulse of these market shifts, we remain committed to supporting energy security in the Southwest through strategic expansion and operational resilience."

About Sky Quarry Inc.
Sky Quarry Inc. (NASDAQ:SKYQ) and its subsidiaries are, collectively, an oil production, refining, and a development-stage environmental remediation company formed to deploy technologies to facilitate the recycling of waste asphalt shingles and remediation of oil-saturated sands and soils. Our waste-to-energy mission is to repurpose and upcycle millions of tons of asphalt shingle waste, diverting them from landfills. By doing so, we can contribute to improved waste management, promote resource efficiency, conserve natural resources, and reduce environmental impact. For more information, please visit skyquarry.com.

Forward-Looking Statements

This press release may include ''forward-looking statements.'' All statements pertaining to our future financial and/or operating results, future events, or future developments may constitute forward-looking statements. The statements may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project,” or words of similar meaning. Such statements are based on the current expectations and certain assumptions of our management, of which many are beyond our control. These are subject to a number of risks, uncertainties, and factors, including but not limited to those described in our disclosures. Should one or more of these risks or uncertainties materialize or should underlying expectations not occur or assumptions prove incorrect, actual results, performance, or our achievements may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. We neither intend, nor assume any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. You are urged to carefully review and consider any cautionary statements and the Company’s other disclosures, including the statements made under the heading "Risk Factors" and elsewhere in the Company’s Form 1-A offering statement filed with the SEC. Forward-looking statements speak only as of the date of the document in which they are contained.

Investor Relations
Jennifer Standley
Director of Investor Relations
Ir@skyquarry.com

Company Website
www.skyquarry.com

¹ https://www.energy.ca.gov/publications/2024/transportation-fuels-assessment-policy-options-reliable-supply-affordable-and, p.71
² https://www.energy.ca.gov/publications/2024/transportation-fuels-assessment-policy-options-reliable-supply-affordable-and

FAQ

What is causing the potential fuel shortage in Nevada according to Sky Quarry (SKYQ)?

California refinery shutdowns (Martinez and Phillips 66), regulatory challenges, and increasing Nevada industrial demand are causing potential shortages, as California supplies 88% of Nevada's fuel needs.

How much refining capacity will California lose from recent refinery closures affecting SKYQ's market?

California will lose approximately 18.64% of its refining capacity, with Martinez accounting for 9.64% and Phillips 66's Los Angeles refinery closure reducing capacity by 9%.

What is Sky Quarry's (SKYQ) current refining capacity and expansion plans for 2025?

Sky Quarry's Foreland Refinery has 4,500-5,000 barrel-per-day capacity and plans to increase production in 2025 to address regional supply gaps.

How will California's ABX2-1 law impact SKYQ and Nevada's fuel supply?

The law requiring refiners to maintain high inventory levels could create artificial shortages in Nevada's fuel market, potentially benefiting SKYQ as Nevada's only refinery.

What percentage of California's fuel supply is imported, affecting SKYQ's market conditions?

California imports 59% of its crude oil, fuels, and blend feedstocks from outside the US, averaging 850,000 barrels daily in 2022.