Craft Gem Dust from Gems or Soul Gem Fragments.
Craft Soul Gems from Gem Dust.

Find the recipes at any Smelter (Smelters were chosen to prevent skill gain). Regular gems (Amethyst, Diamond, etc.) can be ground for Gem Dust. More expensive gems yield more Dust. Any empty Soul Gems can be ground for Dust as well - Petty gives the least, Grands the most. This means you can make Grands from grinding up Pettys, but there are a couple caveats:

1. Soul Gems grind into 2/3 as much Dust as they need to be made. Pettys cost 3 to make but grind into 2, for example. Grands cost 15 and grind into 10.
2. Crafting better Soul Gems requires Enchanting skill (no perks). 20 to make Lessers, 40 for Commons, 60 for Greaters, and 80 for Grands.

This should not imbalance Soul Gems
It does finally make Soul Gem Fragments useful, give you a choice between selling precious gems or Dusting them, and let you turn your pile of Pettys into useful Grands.

I've added six Black Altars (see images) to the game world using the Cherrywood Dragon Enchanting Table Resource by the talented RefurbMadness. You'll find them mostly in Necromancer dungeons, where I have replaced vanilla Arcane Enchanters with Black Altars. You can find them on your own - or click on the spoiler below for a list of locations:Only necromancers can craft Black Soul Gems! Crafting one at a Black Altar uses a Grand Soul Gem and requires 80 Enchanting skill, 60 Conjuration skill, and that you know the spell Revenant. They can only be made during the night, between the hours of 9:00 PM and 6:00 AM (the recipe will not appear without all of these conditions met).
Hearts are no longer required so there is no more Heartbreaker version or patch. Read the installer instructions if you were using Heartbreaker version and are updating.
Try Jaxonz Positioner if you want to take a Black Altar home with you!
Use Jaxonz Renamer to name your favorite murders and put them on a shelf!

Simple Soul Gem Crafting contains one intentional ITM - do not clean it.

Compatibility
Should be compatible with anything, but Ars Metallica adds Smithing skill gain to the Smelter and makes these recipes level up your Smithing (the only thing I dislike about that mod). Load Simple Soul Gem Crafting below Ars Metallica or any mod that adds skill gain to the Smelter. This is important because Soul Gem crafting should not grant Smithing XP. Or just enjoy the free XP, whatever. I'm probably not your dad.
Addons for Bruma and CCOR's new gems included in the main download.


Lore-friendly?
I looked and found no lore on the creation of (regular) Soul Gems. The concept is just that they're crystals capable of storing a soul, so the exact means doesn't seem important. What I believe is important is its accessibility in-game, which is what I built the mod around.
Making Black Soul Gems was a lot cooler in Oblivion but this kinda takes the same direction. Certainly more lore-friendly than how Vanilla just drops them randomly!

Want to contribute?
I can't make models. Make a nice model for Gem Dust and I'll mail you a pizza roll.