Supply of asphalt a balancing act

All but the final stretch has been completed on India’s Golden Quadrilateral, a new highway linking the urban centers of Delhi, Mumbai, Chennai and Kolkata. Stretching more than 3,600 miles, the four-lane beltway represents just one phase of the massive National Highways Development Project launched in 2000. When the multibillion-dollar project is completed by 2015, more than 15,000 miles of new and improved roadways will be open for the transport of goods and people through rural India. And ExxonMobil is helping pave the way.

“India is investing in its infrastructure with the same intensity that it previously invested in its high-tech industries,” says Bernard Alloncle, global asphalt director for ExxonMobil Lubricants & Petroleum Specialties (L&PS). “We’re proud that our company is making a contribution to the nation’s development.”

Road building is expected to invigorate the global market for asphalt — or bitumen, as the product is also known outside the United States. Between 2010 and 2020, worldwide demand is likely to rise 1 percent to 2 percent a year, with demand growing in developed and developing countries. Even in the mature markets of North America and Western Europe, new investments in infrastructure projects will contribute to asphalt demand.  

A world leader
ExxonMobil is a world leader in the production and marketing of asphalt. As crude oil is distilled in the refinery to make fuels and other high-value products, it leaves behind a heavy residue that’s used to make asphalt that binds with gravel to form blacktop. About 90 percent of asphalt production goes to the road-paving market; the remaining 10 percent is used for roofing and other construction materials. ExxonMobil makes approximately 100 asphalt formulations, tailored to national specifications and customer needs. The company also licenses some of its product technologies to the asphalt-resale market.

Asphalt is traditionally delivered by truck, with domestic refiners supplying local customers. As asphalt demand has expanded on a pace with highway construction, outstripping supplies in many developing countries, road builders have relied increasingly on supplemental imports. International companies with strong refining and supply networks are helping to fill the gap.

ExxonMobil produces asphalt at 17 refineries located in the United States, Canada, Central America, Western Europe and Southeast Asia. The Singapore complex, for example, exports asphalt to emerging growth markets such as India, Indonesia and Vietnam. Singapore also ships asphalt to the huge, established Chinese market, where the focus on economic growth has expanded to the developing provinces of the rural west.

Supply and demand
While asphalt demand is expected to continue to grow, two key factors may impact supply. The first factor is the quality of new crude oil production, since not all crude oils can be processed to make asphalt. Secondly, “resid,” the raw material from which asphalt is extracted, is also used by refining conversion units, which traditionally produce other products such as gasoline, diesel and jet fuel. “With an increase of conversion units in North America, some refiners in the U.S. and Canada have announced plans to stop or curtail asphalt production,” says Keith Waddell, Americas asphalt sales manager for L&PS.

North America is still the largest asphalt market. Historically, asphalt demand has risen about 1 percent a year. Today, that growth is basically flat, due to the recession. Nonetheless, as activity in the commercial sector has slowed, expected increases in infrastructure spending for highway improvements could offset declines.

Ralph Shirts, asphalt technology lead for the Americas, is chairman of the Asphalt Institute, a U.S.-based trade association. Shirts met this spring with executive directors of paving-trade associations. “They had just one question,” he says. “‘Will industry have enough product?’”

Canadian crude source
ExxonMobil certainly will. Two of its U.S. refineries produce asphalt, supplying product to customers by rail, barge and truck across two-thirds of the national map. Asphalt production at these sites benefits from direct access to heavy crudes pipelined across the border from Canada.

Canada is one of the world’s leading producers of heavy oil. ExxonMobil’s majority-owned affiliate, Imperial Oil, one of Canada’s largest energy companies and the country’s largest refiner, produces asphalt at three of its four refineries and is the largest producer of asphalt in Canada.  

“Imperial’s wholly owned Cold Lake crude in northeastern Alberta is one of the best-quality asphalt crudes in the world,” says Waddell.

In ExxonMobil’s laboratories, asphalt technologists are working on product formulations that will satisfy a growing customer demand for an even harder, more durable blacktop. For example, polymer-modified asphalt makes a thinner, tougher layer of pavement — ideal in areas with wide temperature fluctuations and heavily trafficked roads. Company scientists are also working on “warm mix” processes for binding asphalt with gravel, to replace the more traditional “hot mix” technique. This allows road builders to blend blacktop at lower temperatures, thus using less energy.

But perhaps the most important research mission is the improvement of crude flexibility. “Our researchers are working to develop new processing technologies to produce asphalt from a greater range of crude slates,” says Alloncle. “We stand ready to meet the challenge of rising global demand.”