Well-oiled problems

Bill Wilson / August 14, 2008

With the Democratic primary votes all in, Colorado turned to stuffing the suggestion box.

As the city of Denver put the final sweep on the Democratic National Convention stage in early August, concerns about satisfying its traveling audience had ceased—if only for a short time. Repairs to the main asphalt drag leading into the metro area, I-25, were executed, but the Colorado Department of Transportation (CDOT) was still trying to mop up a crisis situation. Escalating asphalt prices and shortages, combined with the bankruptcy filing from one of the nation’s largest asphalt producers, SemMaterials, had CDOT officials cutting and redirecting. They were open to ideas.

“It is definitely a dynamic situation,” Stacey Stegman, spokesperson for CDOT, told Roads & Bridges. “Some projects are going to suffer more than others, but the industry has really stepped up to find solutions.”

CDOT and other state transportation agencies were hit with a triple helping of distress in July. First there was the continued spike in oil prices, which saw the price of asphalt jump to as much as $800 a ton. Two European plant closings, which supplied CDOT with polymer that strengthened its asphalt mixes, elevated the tension. SemGroup’s Chapter 11 bankruptcy protection was perhaps the breaking point.

An immediate fix was to lay down non-polymer-modified asphalt mixes in roads that were in need. Even though the mat probably was not as strong as polymer-based ones, Stegman said, it only took about a year off the pavement’s life expectancy. As for future projects, CDOT is keeping its options open, and that includes using more concrete.

“We are looking at projects on a case-by-case basis,” said Stegman.

The city of Grand Junction, Colo., celebrated the opening of Riverside Parkway on Aug. 15. However, officials were just happy to close the book on the rise in material costs during the duration of the job. When ground was broken in October 2005, asphalt was at just $100 a ton. With the price of concrete, fuel and asphalt swelling over the last couple of years, the final invoice for the Riverside Parkway came in at $110 million—$13 million over budget. Grand Junction has dipped into its general fund to pay for road construction and maintenance projects this summer and confined its chip seal program, which usually runs eight or nine weeks, to the month of July after its supplier, Denver-based Cobitco, announced it had cut its asphalt delivery in half.

As for SemGroup, the plan is for the company to sell all of its assets to pay off debt accumulated while buying other companies and suffering a $2.4 billion loss in hedged oil trading. SemGroup Energy Partners LP, which includes SemMaterials, was operating as a separate entity, but 80-90% of its revenues came from SemGroup. SemGroup’s bankruptcy petition noted energy firms such as Pimco and ConocoPhillips are owed more than $1 billion.

Despite the shake-up, the asphalt industry is assuring CDOT and others relief is on the way.

“They are telling us asphalt cost and supply will improve come fall,” said Stegman.

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