The Asphalt Challenge

The asphalt industry has experienced many complex challenges over the last 20-25 years and the continued success of individual companies is strongly dependent on efficient operations and utilizing new technologies and new products to solve the challenges they face.

In the 1990’s, global crude oil was trending towards heavy sour (sulfur-bearing) crude with the resulting asphalt production increasingly being fed to cokers to maximize the recovered value of the heavy crude.

Development of the Canadian Oil Sands and subsequent recovery of the sand-bound bitumen generated a new heavy crude but the recovered oil was too viscous to transport without dilution. Upgraders were required to produce a “synthetic crude oil” that could be efficiently transported by rail or pipeline but the resulting characteristics of this synthetic crude oil and particularly of the contained bitumen are very different than that of conventional crude oil.

Refiners in the Midwest and Rocky Mountain regions began to experience a significant decline in m-Value, which in many cases, was tied to their processing an increasing amount of this synthetic crude oil and that trend continues to expand today as more synthetic crude is processed by an increasing number of refiners across the country.

The PDVSA strike and resulting loss of asphalt supply in 2002-2003, challenged the industry to quickly learn how to qualify and use alternative asphalts and extenders. When PDVSA asphalt returned to the marketplace, the product quality had changed and the asphalt marketplace had also changed.

During the shale boom from 2008-2014, the increasing availability of low-cost shale oil from fracking fields like the Bakken and Eagle Ford, enticed refiners to process less heavy crude. As shale oil carries little asphalt, the result was less available asphalt and the asphalt quality again had changed.

Following the OPEC price reduction in late 2014, continued investment in the shale fields became uneconomical and suddenly the refining community shifted back to processing large quantities of imported heavy crude. Unfortunately, the ensuing quality variations of the generated asphalt were much greater than prior experience, leaving a new and more complex challenge to the end user; how to formulate to frequently-changing base binder characteristics.

In late 2016, OPEC agreed to reduce production to stabilize pricing and North American shale oil gradually returned to become the world’s marginal crude supply, providing crude oil price stability but again threatening North American asphalt supply.

Integrated traders took advantage of price arbitrage in 2016-2019, bringing new supplies of asphalt to the U.S. East Coast and further magnifying the quality deficiencies of the asphalt this industry relies on.

The COVID pandemic wave in 2020 brought a whole new set of challenges to the global refining community and to all of the market segments dependent on this industry. Fuel demand plummeted and refinery rates were reduced or refineries entirely shut down. As we entered 2021, demand is slowly recovering but the refining community still seeks the right balance of crude oil selection and refined product economics, further stressing the related quality issues in products such as asphalt. The asphalt end-user needs to be prepared for more challenges ahead.

Further compounding the challenges of managing changing asphalt quality; the expanding use of asphalt additives, extenders and diluents has greatly magnified the complexity of developing and maintaining a cost-effective and successful formulation for a paving or roofing application.

A huge wave of vegetable oil-based rejuvenators and extenders entered the marketplace over the last 5-7 years as stories of unexplained early road failures shocked the state and federal highway agencies and threatened to isolate and potentially ban many useful modifier chemistries.

Recent issues of over-use or miss-use of some of these new additive chemistries has again shocked the marketplace and generated caution and skepticism of many promising and beneficial chemistries.

Today, the asphalt user seeking help with chemical additives is challenged to choose between vendor promises and market rumors of early road failures, which actually may be more attributed to the lack of discipline in the use of one or more of the many additive chemistries.

Crude oil selection by the refiner is largely based on total refining economics, not the selling price of asphalt, regardless of the end use of that asphalt. Refining decisions, driven by the need to generate higher value products to recover their investments, typically do not reflect or even consider the roofing manufacturers’ or paving contractors’ requirements for consistent quality asphalt. A refiner today will have little interest in choosing a select crude slate in order to generate a better quality asphalt.

In little more than a decade, North America has experienced (i) significant shifts in the availability of asphalt, (ii) higher costs for the available asphalt but more importantly, (iii) dramatic and continuing changes in asphalt quality & consistency; all of which, threatens the paving contractor’s and roofing manufacturer’s long-term ability to provide a high quality product, significantly increases the costs of paving our highways and ultimately, impacts the life cycle of those roofs and highways.

Highway paving in the U.S. uses 18-20 Million tons of asphalt each year and ~60% of that asphalt is modified with SBS, EVA, APP, GTR or other compounds to add specific functionalities. The roofing industry uses 4-5 Million tons of asphalt each year and approximately 20% of roofing asphalt is modified with SBS, APP or other polymers. These polymer modifiers provide elongation, elastic recovery, wear resistance and enhanced thermoplastic characteristics at a wide range of temperature and environmental conditions, allowing the asphalt compounds to yield longer life highways and more resilient roofs on many commercial buildings, schools and hospitals.

As asphalt quality has declined, polymer affinity and effectiveness have also changed, in many cases, requiring additional polymer to compensate or using chemical modification to offset or delay the impact. Applications extend beyond roofing or paving applications and add substantial benefit to adhesive and sealant formulations.

These rapidly changing circumstances continue to present an opportunity for a group of modifiers to predictably (a) improve or protect weathering characteristics for shingle manufacturers, (b) improve polymer affinity in the case of SBS, APP or other polymer modified products for paving and roofing applications, (c) improve processing characteristics of filled asphalt compounds, (d) allow use of lower cost and more readily available asphalt feedstock, all without compromise of pavement performance or roofing manufacturer's warranty requirements.

This portfolio of products must fit into and be compatible with the vast range of chemistries and structures found in asphalt (which naturally varies in composition based on the crude oil). In some cases, these novel materials may provide improved functionality to the compound and to the finished product. In other cases, they may function as compatibilizers or as cross-linking agents to improve the durability characteristics of the asphalt compound or pavement mix.