ANCHORAGE, Alaska (AP) — Road construction costs north of the Alaska Range have increased because of the higher cost of asphalt, a consequence predicted when the North Pole refinery stopped producing asphalt oil on June 1.
Asphalt oil for projects in Fairbanks and points north now has to be shipped from the Tesoro refinery in Nikiski on the Kenai Peninsula, the Alaska Journal of Commerce (http://bit.ly/X8xzlG) reported.
The change has increased the cost of asphalt oil by about 20 percent, or $150 per ton, said Travis Cline, general manager for Exclusive Paving.
The "rack" price of asphalt oil from June 20 to early September was $600 per ton, down from $619 in 2013, but the cost of hauling it north increases the expense.
"Those numbers, that they use for that index, that is what they get direct from the manufacturer," Cline said. "That price doesn't take into account the trucking. That's why when it finally gets to our jobs here in Northern Region it's quite a bit more expensive."
Most paving is done in late summer or early fall. Contracts for summer projects were awarded last winter or early spring, well before Flint Hills Resources Alaska announced it would close the North Pole refinery June 1.
Frank Ganley, a construction engineer for the state Department of Transportation, estimates the Northern Region will use 25,000 tons of asphalt oil this year. The asphalt oil increase means the state and its contractors face a higher expense of $3.75 million.
Asphalt oil accounts for about 6 percent of the final product laid on the road surface. DOT road construction contracts include a price adjustment clause that requires contractors to share in up to 7.5 percent of the added cost, Ganley said.
Exclusive Paving was awarded two of the largest resurfacing jobs in Fairbanks on Airport Way and the Johansen Expressway, Cline said.
"What a year to have the big paving jobs when the price of (asphalt) oil goes up like that," he said.
Transportation logistics have contributed to the cost, said Lane Keator, Fairbanks terminal manager for Carlile Transportation System.
"The biggest challenge is probably maintaining the heat," Keator said. "It's loaded hot in Nikiski and it's a 12-hour, one-way trip minimum from Nikiski to Fairbanks."
Asphalt oil is heated to 300 degrees or more keep it liquid. Carlile and other companies have to pump it into heated tanks, reheat it in Fairbanks or North Pole and pump it back into the tanker trucks before it is sent to its final destination, which could be Deadhorse or Eagle.