Insulation Management and Its Value to Industry

Michael J. Lettich

September 1, 2003

Just look at any chemical, petrochemical, or petroleum refining facility. Much of what you might see is insulated piping, equipment and vessels. There sure looks like there is a lot of it. As a matter of fact, there is a great deal of insulated pipe, equipment, tanks and vessels. As an example, let’s consider a "typical" mid-size chemical plant and oil refinery. A mid-sized chemical manufacturing plant can contain more than 61 miles of insulated piping and more than 6 football fields (270,000 square feet) of insulated equipment, vessels and tanks. A medium sized oil refinery contains 356 miles of insulated piping and more than 32 football fields (1,440,000 square feet) of insulated equipment, vessels and tanks.

It seems clear that insulation serves an important role in the operation of all chemical, petrochemical and oil refining facilities. But why is it important?

  • Process Control is first and foremost. Insulation helps retard the flow of thermal energy into or out of a process, keeping temperatures stable, allowing chemical reactions to proceed normally and safely to manufacture the chemical and oil products.

  • Energy Conservation is next. Without insulation, thermal energy would escape uncontrollably to the atmosphere, wasting billions of dollars. Figure 1 (page 10) illustrates the energy loss from an uninsulated 4 inch pipe versus one insulated with 2 inches of insulation and covered with aluminum jacket.

  • Freeze Protection is the next most important service that insulation performs for those facilities in northern climates. Without adequate insulation on critical service equipment supplying cooling or fire protection water, steam condensate, and other aqueous solutions, they would freeze, preventing them from performing the service they were intended to do. The freezing of this equipment also results in rupture and breakage of pipe and equipment due to water’s unique property to expand when frozen. This results in millions of dollars of damage along with the potential for serious environmental and personnel safety problems.

  • Personnel Protection from burn hazards is the next important service insulation provides. Much of the insulated pipe and equipment in a chemical plant or oil refinery operate at temperatures ranging from 200 degrees Fahrenheit (F) to more than 1000 degrees F, and are located near where plant employees and contract personnel work on a daily basis. Insulation is frequently the only barrier keeping personnel safe from these hazards.

  • Emissions Control, although frequently not recognized, is the final service insulation provides to an industrial plant. Figure 2 (page 10) shows the emissions loss from the same 4 inch pipe, comparing bare versus 2 inches of insulation.

Industry Appreciates Insulation-Or Does It?

With all the essential service insulation performs for industry, it must be an important element in each facility’s maintenance program ?right? Well, let’s look at those chemical plant and oil refinery examples discussed earlier. Figure 3 (page 10) shows the typical damage present, the problems created and their costs. Another way to look at the scope of the problem is to look at the asset value. Take that typical mid-size chemical plant with existing damages, assuming an invested value of $500,000,000. A normal chemical plant contains from 6 percent to 10 percent of its asset value in its insulation systems. This means there is between $30 million and $50 million of insulation damage to this facility. With the cost of energy from about $4/MM Btu to more than $10/MM Btu, repairs to many of these damaged insulation systems would yield anywhere from 30 percent to more than 300 percent plus return on the investment (ROI) to repair them. So, with this kind of damage and the potential for excellent payback once repaired, it looks like insulation maintenance isn’t managed as well as it should be, nor does it look like it’s considered very important, despite compelling evidence. Why?

Quoting a fellow consultant and friend of mine, V. S. Pignolet of Balmert Consulting: "For something to get fixed, it first must be noticeable. Then the level of damage must be objectionable." The abundance of insulated pipe and equipment that surrounds industrial facility managers makes it difficult to recognize the impact of what looks like such a small amount of damage. However, often the biggest reason is much of the damage is either not noticed or viewed as not important. Insulation damage ranges from cosmetic, such as staining, to completely bare equipment.

A good example of "not noticed" was an insulation assessment I performed at a chemical plant in the Texas Gulf Coast. Plant management was concerned about the quality and capacity of their steam delivery system. Often, the steam pressure was dramatically reduced and there was an excessive amount of condensate within the system at the end of the main utilities distribution pipe rack. As a result, those production manufacturing facilities were having a more difficult time operating efficiently.

As I started my assessment survey, I interviewed personnel from the utilities area. These personnel indicated that each time it rained they had to add about 25 percent more steam generating capacity in order to meet the demand. Since this was the Texas Gulf Coast, the plant saw rain.

Looking at the utilities distribution pipe rack from the ground showed only incidental damage to these steam pipes. However, once I gained access to the top of the pipe rack, the picture changed. These steam lines were installed with glass fiber insulation covered with corrugated aluminum jacketing (great for trapping water and diverting it into the insulation when used on horizontal runs). Over the years, maintenance activity, storms, salt in the air from the Gulf Coast only a few miles away and the mildly corrosive atmosphere resulted in numerous small holes in the aluminum jacketing. The result …each time it rained, nearly the entire run of steam lines in this pipe rack was getting soaked, ruining the insulation efficiency and condensing the steam before it could get to many of the process facilities. The project designed to upgrade this damage yielded more than 150 percent ROI for the energy savings alone. In addition, each production facility found a more reliable source of steam with less difficulty efficiently operating their facilities.

A case of "not realizing" was an insulation assessment I performed at a chemical plant in the Midwest. This plant operates much of its facility well below 0 degrees F, with some in the cryogenic ranges below minus 100 degrees F. The insulation system was cellular glass with an applied "asphalt cutback" vapor retarder and aluminum jacketing. At a casual glance most of the insulation systems looked intact. However, most of the piping, equipment and vessels showed extensive condensation and mildew growth on the jacketing (photo 7, page 16). Over time (with the help from some maintenance and shutdown activity damage) the vapor retarder had failed, filling the system with moisture. Figure 11 (bottom right) shows the loss of insulation efficiency as a result. Again, with refrigeration energy costs of almost $40/MM Btu, a project with excellent ROI was developed. Also, the refrigeration units could run during the peak mid-summer times without reaching their capacity limits.

Maintenance: Still a Reactive Program

Another reason so much of industry’s insulation systems remain damaged is the manner they are repaired. Insulation maintenance remains a very reactive maintenance program. Simply stated, this means that once it gets found, it gets fixed. The consequences of this type of maintenance are many.

  • Usually only the most damaged, highly visible, items get fixed. As a result, every $1 that would have been spent to repair the insulation with minimal damage (e.g. sealant or jacket repair) will cost from $10 to well more than $50. This doesn’t help to stretch already reduced maintenance budgets!

  • Each scope of work is small, leading almost invariably to low insulator work efficiency and high cost. The insulator must mobilize, secure all necessary permits, and get to the work site. This element of cost is essentially fixed, meaning it will take about the same money to fix 3 feet as it would 30 feet of insulation damage in any one area. I have performed and seen studies that reflect from 20 percent to over 300 percent less insulator work efficiency for work performed this way. Once again those precious maintenance budgets are getting strained!

  • Many damaged areas are never even seen at all so are never fixed. Hard to see areas such as congested, multi-tier pipe racks or the highest elevations of a facility are good examples. Personnel seldom travel there and can’t see well if they do, so needed insulation repairs are overlooked.

  • Doing repairs in this manner makes it extremely difficult to identify the work that has been accomplished. As a result, a busy operations manager, who probably doesn’t fully understand the benefits of insulation maintenance, sees money being spent without any real visible benefit. This makes a tempting budget cutting target if money becomes scarce!

So with insulation damage not being noticed, insulation maintenance not being viewed as important, the benefits not well understood and often the work that does get done is done very expensively, how (if at all) can we improve it? The answer is to develop a planned or strategic approach. A strategic approach is planned and executed to target and fix those areas of damage with the potential for best benefit to the facility and packaged in such a way to delivery the best long term cost. What follows is an explanation of ways to get it done.

1. Prioritize the Facility

Analyze how important the insulation systems are for each section or process unit within your facility. (e.g. The catalytic cracker unit within an oil refinery is large, contains large equipment, piping and vessels and utilizes some of the highest temperatures anywhere within the refinery, so prioritizing this area will likely save the largest amount of thermal energy and therefore money.)

2. Prioritize the Roles Insulation Serves

Which insulation systems are the most important and why? Is it process control, energy management improvement, freeze protection, personnel protection or environmental emissions control? (e.g. A chemical plant process unit manufacturing an aqueous chemical compound probably should be very concerned with freeze protection.)

3. Scope

Survey and quantify the necessary repairs, taking into account the quantity of damage, type of damage and its physical location. This is the first step in assembling a work package that will yield the greatest benefit and least possible cost. A word of caution here ?Do not assemble work packages any larger than you can reasonably afford to perform within a two-year time period. Any time period longer than this risks a work package that no longer reflects the needed repairs.

4. Package for Geography

Assemble the work according to specific geographic areas. This allows a crew of insulators to tackle a big enough job in any one area to make it worthwhile to get them there. The cost to mobilize a work group to and from any area can be anywhere from 10 percent to 20 percent plus the total job cost.

5. Package for Insulation Damage

If budgets are an issue, consider performing repairs only on those insulation systems with damage that will yield the greatest benefit to the facility. (Careful with this one! If you split up the work in any one specific geographic area, you end up paying the work crew to come back time and again to perform work in the same area. Balance this need with point number 4 discussed previously.)

6. Specifications

Insulation systems are NOT a "one size fits all" proposition If you are only repairing a relatively small part of the insulation system, you probably want to consider specifying what’s already installed, unless it’s a hazardous respirable fiber such as asbestos. However, if you are doing a large amount of work on any one system, consider:

  • the environment (exterior vs. interior, corrosive chemicals, temperatures, etc.).

  • the possibility for physical abuse such as maintenance.

  • areas of regular maintenance (removable insulation systems may be needed).

  • vibration

  • the reason for insulating (personnel protection, energy, etc.).

  • cost and other factors.

All these factors affect how well the insulation system will perform, how long it will last and what it will cost. Time spent thinking about this will give you an insulation system that will last, resulting in the lowest long-term cost.

7. Cost Information

Ideally, it would be nice to know what the work should cost prior to the start of job. A responsible contractor, particularly one in which you have a contract, can assist you in providing estimates for various job costs, giving you valuable information in deciding how much you want to spend and how much value you think you’ll receive from the expenditure. There is a belief in some places that if you get a number of contractors together, show them the work and request lump sum proposals from them then you AUTOMATICALLY get the best price. This is NOT always the case. Sometimes contractors may propose prices that some may think are higher than what the job should cost. Why? If it’s a busy time for all contractors in a region, then manpower is scarce and the contractors may be stretched thin trying to do the work they already have. This condition often results in prices higher than normal. Again, a responsible contractor can give you estimates of what they think the job will cost, allowing you to decide to go ahead with the work, delay the work or perform it another way.

8. Execute

Consider the best way to perform this work. There are a variety of ways to perform insulation work. Assuming you are considering using an insulation contractor, you can do it several ways. Several contractors can review the work at a pre-bid job meeting and submit lump sum bids. You can arrange to have the contractor perform this work on a "time & material" basis with the contractor charging for each hour of labor they spend plus the cost of all materials and equipment used on the job.

You could also have several contractors offer a "unit price" proposal in which the contractor proposes a fixed fee to perform a specific unit of work (e.g. 1 lineal foot or 1 square foot for a specific insulation system installed on a specific surface).

Each of these methods has been designed to perform cost effectively for the right kind of job under the right kind of circumstances.

9. Monitor

The old saying goes "You expect what you inspect" and that is true for insulation work. Thorough monitoring of the work for safety compliance, adherence to specifications, installation quality, scope completion and schedule maintenance is critical in assuring that the work has been performed according to what you requested and delivers the insulation system necessary to do the job you wanted done. Obviously it’s important for you to inspect the work. After all, nobody knows the facility like you do, along with the potential for hazards and how to control them. Nobody knows what needs to be done better than you, and nobody looks out for your interest better than you. However, an insulation contractor can be a valuable partner in making sure the work is done in a satisfactory manner. You should look for a contractor that has a proven and demonstrated quality process system in place. A good contractor will be happy to explain in detail its quality program.

Managing your industrial facility’s insulation work in this manner may be dramatically different than what was done before. However, doing it in this way gives you, the facility owner, the best chance to fix the most important insulation repairs that will benefit the facility the most, at the least possible cost for a quality job designed to last a long time. You have the added benefit of performing necessary work to maintain your facility that almost always pays you back, continues to pay for years to come, is kind to the environment and conserves precious natural resources.