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The Case for Insulation Energy Assessments

Look at the cost of energy today. According to the Department of Energy’s "Short Term Energy Outlook – January 2004" (http://www.eia.doe.gov/emeu/steo/pub/contents.html) home heating costs for the 2003-2004 winter period are forecasted to go up in all areas except home heating oil. Adding further bad news, it is forcasted to continue to go up for the foreseeable future. Figure 1 shows the cost of energy from 1991 through the forecasted 2005 costs for crude oil and natural gas.

Now, if you consider 1970, a time period in which many industrial and commercial facilities were built, the energy picture looks even more interesting. Costs for crude oil and natural gas were $2.96 per barrel and $0.17 per MCF, respectively. The projected 2005 costs now represent a cost increase of 761 percent for crude oil and 2,829 percent for natural gas.

Given these facts, it is not surprising that industry has started to take a much greater interest in improving the energy efficiency of their facilities. After all, saving cost through improved energy management would help keep a business competitive in this ever more globally competitive world. Plants and refineries have started to look at improving their boiler, heater and furnace efficiencies. They have tackled process control improvements, maintenance improvements such as improved heat exchanger cleaning and, in some cases, looked at whole new methods and facilities to manufacture their product. Look at the oil refining industry, for example. The oil industry’s benchmark for energy performance is the Solomon Energy Intensity Index (EII). A refinery with a poor EII is not likely to be considered a good performer, and this impression may likely follow down to that refinery’s management.

Although it is likely that industry will need additional time and effort to fully implement their new, improved energy management programs, it seems like they are well on their way doesn’t it? Well, not quite. In many companies’ energy improvement plans, an important element is missing: insulation assessment and upgrade projects.

How important is insulation energy assessment? How large is the stake? What’s the opportunity? Let’s find out.

The Stake and Opportunity

Previous articles have mentioned these but they probably remain the best example. Look at a typical mid-sized chemical plant and oil refinery of 125,000 barrels per day (BD). Figure 2 shows clearly what the amount of opportunity is.

Considering there are more than 200 refineries and far, far more chemical manufacturing plants, that amounts to billions of dollars available to be saved.

However, the potential energy improvement opportunity does not stop there. Remember the low energy costs for crude oil and natural gas mentioned above for the year 1970 and the fact that many of the U.S. chemical manufacturing and oil refining facilities were constructed around this time? Insulation selection and design often consider the cost of energy as one of the important factors determining the insulation thickness needed for effective performance. Figure 3 shows the difference in insulation thickness for the same 4" pipe example using 1970 actual and 2005 projected natural gas energy costs.

Clearly the example shown in Figure 3 suggests there may be a much larger potential savings for industry by considering insulation thickness upgrade opportunities even for those insulation systems that are physically intact. Using the same 4" pipe example from Figure 3, the energy saved by upgrading its insulation thickness from 1" to 3" is over 717,000 Btu and $4.64 per year for just 1 linear foot! Now, look at that typical chemical plant or oil refinery again! Those 61 miles and 356 miles of insulated piping respectively look like an even larger opportunity for energy cost improvement than you first thought. Clearly not all of these existing insulated piping systems are good opportunities for insulation upgrade opportunities for many reasons:

  • They are newly installed with current upgraded insulation systems;

  • They have been upgraded in the recent past; or

  • Physical space limitation may restrict insulation system upgrades.

However, this makes a strong case for assessing your insulation systems to see where those insulation systems upgrade opportunities exist.

Energy Is Not the Only Gain

Do you need additional convincing? Insulation assessments and their resulting upgrade or repair projects can have an impressive effect in reducing various environmental emissions. It is likely you are skeptical how much, if any, insulation assessments and their improvements can have on environmental emissions. Well, let’s look at it.

Emissions Improvement

Nearly all sources for today’s energy (excluding nuclear, geothermal, wind and hydroelectric electrical generation systems) come from fossil fuels in one form or another and the combustion of those fossil fuels to get at that energy source. This results in the release of carbon dioxide (CO2), a "greenhouse gas," various compounds of nitrogen and oxygen (NOX), an atmospheric pollutant, plus carbon monoxide (CO), sulfur compounds and others. So how does upgrading or repairing damaged insulation systems have much, if any, affect on the amount of environmental emissions? As mentioned above, performing an insulation energy assessment, and then acting on it to repair or upgrade insulation systems, saves significant amounts of energy As a result less fossil fuel needs to be burned in order to create the energy and less CO2 and NOX emissions are produced. Figure 4 shows just how much CO2 and NOX is saved for several common pipe sizes operating at 400°F, a common operating temperature for both chemical plants and oil refineries.

Emission savings look as impressive as energy cost savings. Looking at only CO2 savings for the smallest example, the 4" pipe, there are savings of over 1.5 tons of CO2 per year for only 1 ft of bare pipe. Once again when we look at the amount of insulated piping, vessels and equipment that exists and how much is damaged or may be underinsulated by today’s cost of energy, there is a big opportunity to reduce emissions.

Process and Safety Improvement

Performing an insulation assessment and subsequently improving the insulation system, especially damaged insulation, makes those systems much less susceptible to water infiltration and ambient temperature swings. As a result, process piping, vessels and equipment operate with much more stable temperatures, making process control a simpler task and reduces the possibility of plugging or freeze-up almost to zero. Keeping water out of the insulation system also reduces the risk of corrosion under the insulation, therefore increasing reliability and minimizing catastrophic failure of, and its resultant risk to, personnel and the environment.

The Insulation Energy Appraisal

A facility owner has two ways to perform insulation energy appraisals, the use of insulation energy assessment professionals or the use of your own personnel. If you opt to perform this type of assessment with outside resources, the National Insulation Association (NIA) is a source for finding a certified professional. If you choose to perform this work with facility personnel, NIA also offers a training program, the Insulation Energy Appraisal Program, to train your personnel to perform this assessment.

Personnel performing insulation energy appraisals will only be effective when the appraiser obtains a full and complete understanding of the operations involved on the site. This requires a good working relationship established with personnel that typically includes the plant manager, energy manager, maintenance engineer and operations superintendent. This is true whether you are an employee performing this assessment for your own company facility or are an outside energy appraisal professional. Mutual trust is vital, and confidentiality agreements should be proposed to assure that any revealed proprietary information be protected and remain confidential.

Simply stated, system energy losses to (or from) the atmosphere (indoors or outdoors) are directly proportional to:

  • The temperature difference between the materials in the operating system and the ambient air;

  • The surface area of the containment such as a pipe, duct, vessel, or equipment in the system;

  • The characteristics of the insulation system expressed in a term called the overall heat transfer coefficient (U factor); and

  • The annual hours of operation and the efficiency of that area’s energy source.

An initial visit is often solely for gathering this type of general site information. Items such as process and instrument drawings (P&ID), insulation specifications and safety and security requirements can be requested at this time. General design parameters for ambient air temperature, wind velocity, relative humidity, fuel type, fuel heat content, conversion efficiency and annual hours of operation should also be requested. All of this information is essential to calculating energy savings for the insulation energy assessment. When received, they should be duly entered in the appraisal worksheets.

Subsequent plant visits are then for the purpose of gathering data and assessing the individual components. The appraiser must measure and document specific data for each component, such as pipe, vessel and equipment diameters and lengths, operating temperatures, insulation system thickness and materials of construction. Tools for these measurements include a tape measure, penetration depth gauge and infrared thermometer. Pipe calipers and a measuring wheel are also useful, making pipe diameter and length measurements easier. Infrared thermography is also quite effective in obtaining visual images of the system heat losses that highlight problem areas to the owner. They assist in identifying energy losses that might otherwise not be apparent by other visual assessment methods. The photos above show piping that does not show very much damage at first glance, but look very different under IR imagery. A digital camera is also helpful and is recommended to show the present condition of a system component and to aid in locating the specific component once it comes time to show the work to an insulation contractor. Rounding out the tools list, add a clipboard, pencils, chalkboard and marker for item identification in photographs, and the field survey forms on which to enter all the measurements. This is a lot of gear, and some sites are quite large and complex, so if you do not have access to vehicle transportation on the site, it will be helpful to use a backpack to carry the tools.

The final step in the preparation for the walk-through is to prepare the plan of attack. There are two ways you can assess a facility, geographic or system assessments. A geographic approach develops project packages for all work within certain geographic sections of the facility, such as a production unit, run of pipe rack, etc. This allows a facility, owner to make maximum use of the cost associated with access and setup. Often this is no small consideration as it can be 10 percent or more of the total job cost. With a geographic approach, each area assessed should be done in the same, organized way. For example, if you assess the first section working from west to east and then working your way from north to south, do this for each area you assess. This method allows each project work scope to be easily shown again to the facility owner or the insulation contractor that will be performing the work.

A systematic approach is an assessment of a particular insulated system within the facility, from start to finish (e.g., the 150 lb. steam distribution system from the boiler house to the end of the pipe run). This method allows maximum system efficiency improvement and allows you to focus exclusively on those maximum energy saving systems.

Both geographic and system methods have their advantages; so select the method that provides the best assurance that each and every component of the process is observed and fits the facility’s needs best. Deciding on the best plan of attack for the assessment at this stage provides the foundation for an effective assessment and its resulting work packages.

Confirm your appointment with your contact, and be at the site on time fully prepared to find those items where the insulation systems are not performing as intended. The appraiser must remember he is a visitor subject to the security and safety regulations of the owner. Remember, you can not help anyone if you are not welcome at the facility.

So what does one look for? From the statistical viewpoint, there are more installations where fluids are being handled at temperatures above ambient than below. Systems that are outdoors are exposed to the elements and present high potential for insulation system water damage and deterioration and often the greatest opportunity for maximum energy savings.

Look for insulated system components with bare surfaces exposed to the ambient air. Most people are amazed to learn that heat losses are about 20 times higher for bare surfaces than for insulated surfaces regardless of the insulation type and thickness. Measure the temperature of this surface; determine its surface area and orientation, give it a unique description number; photograph it; take a thermographic image if available, and enter the measured values on the field survey form along with the insulation type and thickness in adjacent sections. If it is a piping run, we must measure the diameter of the pipe, measure the length of uninsulated pipe, and enumerate the number and descriptions of uninsulated fittings such as elbows, tees and valves. Sometimes there may be a reason to leave a hot surface uninsulated where energy losses or personnel protection considerations are secondary in importance to the owner. The appraisal will help put a monetary value on the cost of such a decision.

Look for insulated system components where the exterior surfacing treatment is damaged, penetrated, missing or lacking the seals at seams and joints that provide paths for water migration underneath the weather barrier. In the case of fluids at low temperature, this surfacing is also to provide vapor retarder protection. Measure the temperature of this surface; determine its surface area and orientation; give it a unique description number; photograph it; take a thermographic image if available, and enter the measured values on the field survey form along with the insulation type and thickness in adjacent sections. A safe assumption for systems located outdoors is that if the weather barrier is damaged, the insulation system is wet. Therefore thermal performance is degraded, and the possibility of metal corrosion problems is greatly enhanced.

Once the data is collected in the field, it is time to use the 3E Plus® Computer program. The 3E Plus® computer program is provided by the North American Insulation Manufacturers Association (NAIMA) and is available for direct download from their website (www.pipeinsulation.org). A comprehensive spreadsheet program is also available from NIA if you have taken advantage of their energy appraisal training program.

These programs are used to determine the energy savings, in Btus and dollars, available for each component of the insulation energy assessment, the best economic insulation thickness for each system and the improvement in environmental emissions resulting from the insulation upgrades.

A Success Story

Sunoco, an oil company with two large refineries located in the Philadelphia, Pa., area, is an insulation energy assessment success story. The oldest of the two refineries was started up in the early 1900s, with the other refinery being a bit newer but still constructed much earlier than the 1970s. Probably for this and several other good reasons, Sunoco is a corporation that has taken an active, aggressive interest in energy management and improvement for several years. They pay close attention to their Solomon EII and continue to look for ways to improve it, recognizing that it is far more profitable to sell energy than consume it. When asked why Sunoco takes such an active interest in energy improvement, Mike Sanders, corporate energy manager, had a very straightforward answer. "It’s (energy cost) 55 percent of the OP(erating) EX(pense) for the refineries!" For Sunoco, looking at energy improvement wasn’t strictly limited to the large energy consumers like boilers, heaters and furnaces. They also attacked process control, aggressive heat exchanger cleaning programs to improve the exchanger heat transfer efficiency and, a few years ago, insulation upgrade projects. Sanders and his management came to realize that insulation energy assessments and their resultant insulation upgrade projects would also yield significant returns on the money spent. In 2003 alone, Sunoco authorized several insulation upgrade projects that have projected return on investments (ROI) from well over 100 percent to well over 300 percent, savings Sunoco millions of dollars as early as 2004.

However, a little surprising to Sunoco, improvements to their insulation systems did not stop at energy cost improvement. When Sanders was doing some post-project follow-up in one of their crude oil units, talks with the unit operating personnel yielded some interesting results. Between the insulation upgrade project and the heat exchanger cleaning program that was completed about the same time, the operators started to notice process operating improvements. Operating temperatures no longer fluctuated as much, making process control better, improving the unit’s performance. Although it’s too early to determine how much savings this will offer Sunoco, typically process performance improvements result in much greater cost improvements than even the energy cost savings. As an additional plus, operating personnel also said they felt running the unit was now easier.

Figure 1

Damaged Equipment

Figure 2

Damaged Piping

Figure 3

Corrosion under Insulation

Figure 4

IR Image of Piping

Figure 5

IR Piping Image

Figure 6

System Assessment Approach

NIA Sites > Insulation Outlook Magazine > Global

Insulation: An Easy Sell

According to Chris House, any insulation salesman or estimator can easily sell the benefits of insulation if he or she is willing to do a little research and preparation. What impresses people most is numbers, he said.

"If you can get some basic information about the energy costs and consumption of a particular plant, and then walk through that plant and make a list of trouble spots, an accurate appraisal can be done using one of the many computer programs available.

"When a potential customer can see an estimate of dollars saved annually printed on a spreadsheet using information they provided, the reaction is usually shock. It is very hard for people outside the insulation trade to visualize the kinds of savings available though insulation without a good appraisal."

House is Chief Estimator/Project Manager at the Lanham Insulation, Inc. home office in Louisville, Ky., founded by J. Daniel Lanham in August 1982. Lanham Insulation supplies and installs insulation in the commercial and industrial markets, with a strong emphasis on ammonia refrigeration, petroleum, chemical and equipment installations. Lanham Insulation employs an average of 30 installers.

"I enjoy the insulation trade because of the diversity of the work. Every project is different at Lanham Insulation. We peruse a wide variety of markets. You could one day design an insulation system for equipment that will be used in the northern part of Alaska, and quote a system in Puerto Rico the next," said House.

House’s responsibilities include acquiring plans and specifications for a given project, estimating and assembling a successful proposal, and, depending on the volume of work, he may also manage 50 to 60 percent of his company’s projects.

In his six years at Lanham and 15 years in the construction industry, House has worn many hats, including that of a welder, quality control manager, job site safety coordinator, and estimator and project manager.

"Before I began working at Lanham Insulation, Inc., most of my experience was in the mechanical field and my knowledge of insulation was very basic. I had seen insulation installed and knew the principles and theories behind insulation, but I did not realize how vast the material choices were and the application procedures used for installing it. I was also impressed with the amount of skill required to properly install insulation in the industrial market.

"To most other crafts in the construction industry, insulation is simply applied and it works; there is no consideration taken for the expertise required to properly design and install insulation as a system," he said.

House said that during his career he has seen changes in the way manufacturers and end-users view insulation.

"I think engineers and plant managers are beginning to understand the long-term benefits of insulation. With rising fuel and electrical costs, more of that budget is being allotted for insulation. These operators are starting to see that not only does insulation pay for itself by cutting energy costs, but it also prolongs equipment life by reducing thermal expansion, contraction and condensation. All of these things reduce stress and corrosion on expensive parts, and combined with energy cost savings, their budgets will grow. The initial expense of the insulation is small in comparison" to the savings it generates, House said.

Some of the largest projects completed by Lanham Insulation, Inc. have been in the ammonia refrigeration field for distribution warehouses owned by some very well-known food and retail stores. According to House, payback on these insulation investments will be around five or six years.

House’s industry training/education consists of multiple courses, including the OSHA 10 Hour Construction Industry and 40 Hour General Industry Trainer Courses, NIA’s Insulation Energy Appraisal Program, and ABC’s Basic and Advanced Estimating Course. He is a Certified Insulation Instructor for the National Center for Construction Education and Research Center. However, House attributes most his knowledge in the field to those with whom he has worked.

"I believe that working with skilled and intelligent people has benefited me most. I have spent some time in the field and worked with a variety of people who have taught me a lot about the installation side of our business. All the book knowledge a person can retain is nearly useless for estimators and project managers without a good understanding of the skill and hard work required for installing the product," he said.

Chris House can be contacted at (502) 245-0660 or via email at chris@lanhaminsulationinc.com.

NIA Sites > Insulation Outlook Magazine > Global

America’s Insulation Industry: Where Are We Headed?

Insulation Outlook recently hosted a high-level ‘information interchange’ among industry experts on issues affecting today’s insulation business community. The highlights of this forum appear in this article. The objective of the day-long event was to open up for debate and discussion a variety of topics suggested by readers of Insulation Outlook. These topics included: trends in the insulation industry; energy legislation and energy codes; trends in green construction; the importance of facility maintenance; and installation and craftsmanship. See the sidebar for a profile of invited guests.

Where Does the Industry Stand on Product Innovation?

Kirk Liddell (Moderator) The image of insulation products is that they never change. Is this a valid statement? Where does the industry stand on product innovation?

Ron King There have been many improvements to existing products, but very few actual new products. Even though imported materials are being used more today, they still have not brought new products to the market. The next significant improvement will more than likely be the removal of Kraft paper from jacketing material. The current economic environment makes it very difficult for manufacturers to conduct the research on new products, and the introduction/acceptance process is not an easy or inexpensive task.

Gary Kuzma I agree that manufacturers tend to focus new product development on what appears to be emerging industry trends. Sustainable design is a new trend that’s becoming widely accepted. When you think about sustainable design, you look for products that are formaldehyde-free, have low VOCs, high recycled content, etc. Manufacturers aren’t necessarily producing as many new products as they are improving or enhancing old products. They are relabeling and repackaging products and promoting them toward current market trends.

Mike Sanders From an end user’s perspective, my company wants and expects innovation. Our senior management is looking for technology, innovation and the life cycle benefit of investing their money. When it comes to funding insulation projects, they want to know what kind of innovative technology will be included in the work scope. At Sunoco, we take a very strong position that we are going to invest in infrastructure. We want to do the best thing technologically, and not do it the same old way. The one question I always ask my consultants is, "Is there a better way?"

Paul Stonebraker Unlike Sunoco, which welcomes innovation, I have found that product innovation runs into serious problems when it comes to user acceptance. Over the last couple of years, there have been a number of new products introduced on the market, some of them viable, which just didn’t go anywhere. The problem is that at the field level, people just don’t have the technical knowledge and are very resistant to change. New product acceptance depends very much on educating end-users.

King I agree that a lack of education can be a serious barrier to change. Because of the economic environment of the last couple of years, manufacturers have had to cut back on staff; so there are not enough people calling on the engineering and architectural communities to help educate them on the value of insulation.

Kathie Leonard The lack of resources is a definite problem for small manufacturers who want to introduce a new product. It’s a hard sell, especially for small manufacturers who just don’t have the people out there selling. And, because there is a separation between the manufacturer and the end user, we have to guess what the market might want, but do we really know? No, we don’t.

Where Does the Industry Stand on Process Innovation?

Liddell Compared to other industries, is the insulation industry current with advanced business-to-business technologies that can help streamline processes, increase efficiencies, and decrease the cost of selling and installation?

Leonard From a process standpoint, one of the areas where our industry has made great strides is in the use of information technology. The internet has allowed my company to become an ‘educator, communicator and a facilitator.’ In the ‘old’ days, we manufacturers expected distributors and contractors to do all of our selling for us. That is not the real world today. By using sophisticated information systems we can get the information out to the end user and still utilize other folks within the chain. Through our website, we ask people what their application is; we suggest the types of products to use; we help them get information and to go through the rest of the channel to get the product.

Kuzma I agree that from a process point of view, the internet has been revolutionary. The ability to download technical information and tools, such as the 3E Plus® insulation thickness program, has had an enormous impact on the process of disseminating information. The willingness of organizations and government agencies to make tools like the 3E Plus® available is an enormous benefit to the engineering community. It helps us validate a design and convince our clients of its benefits.

Sanders Using the internet to design on-line is what the younger generation is about. All they want to do is work on the internet. So my job is to make sure they know what’s out there in terms of vendor sites and all of the Department of Energy websites.

Stonebraker Despite all the advances in information technology, this industry has not reached out to the majority of people who don’t know the value of what we have to sell. Hopefully, by increasing the circulation of Insulation Outlook magazine we can make people knowledgeable about insulation who never even think about it normally. We still have to make a giant leap. We all know the information is good. We all know the information is valid. But, so many people I run into every day have specs that are 30 years old. This has to change.

Does the Insulation Industry Need Standards?

Liddell In the 1990s, the industry was called upon to comply with voluntary energy conservation standards. Have voluntary standards worked?

King Our industry has been lacking an acceptable universal standard for years. I am not sure we have ever had universal standards. Depending upon whom you talk to, manufacturers, contractors, distributors, engineers, etc., you more than likely would get a different answer or recommendation. Standards that would be readily available would be very helpful, especially today when in-depth knowledge of insulation systems is lacking in many arenas.

Kuzma I question the viability of creating a total insulation package standard, but I do feel there is a benefit. There exist ‘best practices’ such as Process Industry Practices (PIP) for the industrial sector, and "National Commercial and Industrial Insulation Standards" published by MICA for the commercial sector.

King Even with PIP, however, there’s a problem of ‘acceptance and enforcement.’ For example, companies with multiple plants – where one plant accepts a certain product while another plant 100 miles down the road does not.

Sanders Looking at insulation standards from the end-user perspective, frequently standards change when a facility’s ownership changes, and we end up with multiple standards in place. This leads to considerable confusion among the in-house folks, the vendors that supply insulation materials, and the contractors who install it. We expect to adopt the PIP standards in 2004 and have already begun the dialogue by including our consultants and our contractors in this effort. This is one way that we can strive to make sure that all of Sunoco’s insulation standards are consistent throughout our facilities.

Stonebraker Be careful what you wish for. If you have a perfect, accepted and enforced standard everywhere, where would be the incentive to reach out and try new things?

Kuzma Voluntary energy conservation standards such as ASHRAE 90.1 already exist for the commercial/residential sector. That standard provides the basis for some of the energy codes that have been adopted by a number of governing authorities at state and local levels. The ASHRAE standard, however, sets a minimum level of insulation. And, in my opinion, the minimum level is too low. It needs to be upgraded.

Kenneth Mentzer Another potential voluntary program, in addition to the existing DOE Best Practices, that may be on the horizon is an "Energy Star" program for the manufacturing sector. While there is nothing specific in place yet, the EPA is being encouraged to think about creating such a program. It would involve indexing what normal practice is, and a star would be awarded for improving on that practice.

Energy Legislation and the Insulation Industry

Liddell The insulation industry has the potential to be significantly impacted by the passage of state and federal legislation. Where do we stand on energy conservation measures currently under consideration by Congress?

Mentzer The current energy bill does not have a lot in it for the industrial sector in terms of incentives. But, it has a whole lot in it for energy efficiency in general. The question now is whether or not it’s going to pass in this session of Congress. [It did not.]

When it comes to future legislation, there will be a number of ‘drivers’ that will ‘fuel’ future energy bills. An example of a ‘supply side’ driver is a recent report by the National Petroleum Council [an advisory group to the Secretary of Energy] that modeled the supply of natural gas to the year 2025. It projected that starting in 2007 or 2008 there is going to be a big gap between increased demand and supply and reported that this gap could be filled by efficiency activities on a number of levels. In essence, what the report is saying to the Secretary of Energy is that if you don’t improve the efficiency of industrial boilers and processes, there is going to be a shortfall in the supply.

On the environmental side, there are going to be big drivers in terms of emissions reductions under the Clean Air Act. When you look down the road, these drivers offer a number of opportunities for NIA’s "Growing the Insulation Industry Program" and for the application of the 3E® Plus program, especially where there are incentives for the manufacturing area to become more energy efficient.

Leonard Canada is a country that has shown great enthusiasm for incentivizing their energy intensive industries to insulate. My firm is selling a lot of materials into Canada and much of that is due to the fact that the government supports programs to save energy.

Mentzer Canada, in contrast to the United States, has signed on the climate change treaty and, as Kathie knows, it does make a difference.

What Kind of Programs Are Available to Help Identify Opportunities for Energy Conservation?

Liddell Do you know of any guidelines that have been developed to help industry conserve energy? How successful are they? Are there any programs that industry should be thinking about as a way to communicate the benefits of insulating to code?

Dr. Tony Wright The DOE BestPractices Program focuses on working with industry folks to help them identify opportunities for improvement in a number of areas: compressed air; motors; pumping systems; steam; processes; and verification and validation of new technologies. We do a lot of work developing fact sheets, documents, different software programs for assessment and assessment support activities. Twenty-six universities now perform assessments for small to medium businesses. Over the last four to five years we have conducted plant-wide assessments as part of a program in which DOE provides matching funds for companies to do plant-wide assessments in terms of overall efficiency, not just insulation. Some of the bigger companies have identified $1 million plus in savings. We have listed qualified specialists on the DOE Web site. We are doing a lot of work on metrics to see what improvements are attributable to the program. The numbers keep building each year. It’s a great way to demonstrate the value of the program.

Mentzer We are working on version 4.0 of the 3E Plus® insulation thickness software program. It’s going to be easier to use and is going to display data in a lot more clearer way. We are working on getting the tool into engineering schools and into various continuing education seminars such as the ASHRAE Learning Institute to try and get people to use it as part of their daily operations. It will tell you the energy you will save, the economic thickness and also the environmental emissions savings. It has the potential to become even more important if the regulatory environment changes in terms of emissions. For example, carbon credits could be very, very valuable in 15 years or so and the program will help calculate emission reductions."

Jim Getgood I agree that the 3E Plus® program is an excellent tool. As a contractor, our biggest issue seems to be a reluctance on the part of our customers to share specific plant information needed to run the program. People really don’t want to take the time to provide the information that is needed. Where 3E® Plus has really succeeded for us is in the distribution of the software to customers. We’ve provided training for plant engineers on the software so they can go back and resolve their own issues and come up with their own answers. Now that has been a great benefit.

Sanders We use 3E Plus® for post audits. We use it to check the savings we thought we were going to get. We then publish a report. Nothing turns an executive on more than some kind of report saying this is what I delivered. When you deliver savings, it makes it easier the next time you go back and ask for money.

Leonard Another software program that’s gaining importance is the Maintenance Audit Program (MAP) energy management tool currently being used by several industries to maintain their insulation systems and control energy costs. It is a longer term approach and provides prioritization of projects within a plant. It also incorporates the 3E Plus® program.

H. Vaughan Privett The National Insulation Training Program (NITP) is an education program developed by NIA to provide education on insulation systems. It covers all aspects of insulation as a powerful technology for enhancing energy and cost efficiency, and process performance. Some of the things students learn are the principles of insulation, system design criteria, insulation thickness determination, general insulation system installation considerations, specification development and insulation system maintenance.

Sanders Many of my people who attended the NITP class are now training others in the company. We take the "train the trainer approach" and are now training our construction administrators so they know what to look for and what to insist upon when it comes to quality of workmanship.

Howard Wiltshire The Insulation Energy Appraisal Program (IEAP) is a certification program developed by NIA to educate appraisers on how to quantify the amount of energy and actual dollars a facility is losing with its current in-place insulation systems and demonstrate the real world benefits of a more efficient system. An insulation energy appraisal can show industry how to significantly reduce energy costs and environmental impact. Managers can utilize the data from the appraisal to make sound business decisions regarding insulation that will have significant payback for the life of their facility. The ultimate benefit of this program is reduced energy consumption for the energy user.

The Role of Insulation in Green Construction

Liddell Sustainable development is the most vibrant and powerful force to impact the building design and construction field in more than a decade. It is the practice of increasing the efficiency with which buildings and their sites use energy, water and materials, and reducing building impacts on human health and the environment through better siting, design, construction, operation, maintenance and removal – the complete building lifecycle. What is the role of insulation in ‘green’ buildings?

Kuzma A ‘green’ building rating system that’s becoming increasingly popular is the Leadership in Energy and Environmental Design" (LEED). LEED was developed by The United States Green Building Council (USGBC) to evaluate the environmental performance from a whole building perspective over a building’s life cycle, providing a definitive standard for what constitutes a ‘green’ building. It is a voluntary, consensus-based, market-driven building rating system based on existing proven technology. How does insulation relate to this? If you improve upon the basic ASHRAE energy standard you can earn points towards becoming a building that is LEED certifiable. Most government clients and many corporate clients are now interested in building LEED-certified buildings. I think as education regarding sustainability continues to evolve, more and more people will jump on the bandwagon. It has gained very rapid growth in the commercial sectors. From an insulation point of view, the LEED program is geared primarily toward energy-efficient design and improved occupancy comfort. Insulation is a vital ingredient to accomplish both.

How Do We Get Companies to Recognize the Value of Maintenance?

Liddell Insulation systems that are not well maintained can lead to a variety of problems, including mold. If facility owners know this, then why is it that most maintenance budgets are traditionally under-funded?

Getgood That’s because maintenance is a difficult thing to get your arms around. The facility owner thinks he is doing too much, and the contractor thinks he is doing too little. From my experience, the vast majority of dollars expended are for repair or modification of an existing system as opposed analyzing a system and truly performing maintenance on that system.

King We are competing for available capital or maintenance dollars. Insulation is not sexy; it’s not some technology gadget; it’s not new – it is a proven technology that is often overlooked. Many plant process systems continue to work even if the insulation is not working, as it should due to damage etc.; thus insulation is often "put off" until another day. Unfortunately, that can lead to even larger requirements for capital – maintenance dollars when corrosion under insulation occurs. Insulation needs to considered a valuable component to the overall system and not an afterthought.

Mentzer At some point, energy costs and environmental regulation are going to convince people to look at different models. Perhaps outsourcing is the answer. Today, everything is outsourced. For example, an outside company could actually own the insulation system and lease the system and provide ongoing maintenance to the facility as a service. Updates in efficiencies to the system could be made as needed. Every three to six months a report could be supplied to the facility owner. The owner wouldn’t have to worry about the system. He just wants what is needed to get the job done. It won’t take long for big companies to understand that if they keep getting fined, that there must be a better way of maintaining their systems.

Training – The Key to Maximizing Performance

Liddell A properly designed, specified, installed and maintained insulation system provides maximum benefits to the end user. Any breakdown in this process can result in a system that does not perform. Sometimes the installer or craftsman is the only trade left with an opportunity to correct errors in design. The question is, ‘what kinds of union and non-union training programs are available for insulation contractors and installers?’

Stonebraker In the union sector, one of the things that we’ve done recently is to disseminate the NIA presentation "Insulation: The Forgotten or Lost Technology" to every Local in the country. The idea is to give installers an appreciation of what they are doing. We want them to realize they are performing a service – energy conservation. The union has a pretty comprehensive training program. Every Local is now computerized, and we are using every available technology.

Getgood Training is a huge part of our non-union business. The push is coming from the industrial markets- primarily from process safety management – to have some assurance that the people from our company who are working in their facility cannot create a catastrophic event. This has made a real shift in the open shop environment regarding training. Currently we are utilizing the NCCER industrial curriculum. This has just been approved, and so we are training to that. In fact, in one facility our people have to have their training noted on their badges. Facility monitors actually come around and check our people in the task they are doing and check their badges. If they haven’t been trained to do what they are doing, it creates quite a problem for us.

Privett Summarizes the Day

Process innovation versus product innovation – we seem to have one, but not the other. While there has been very little product innovation in our industry, there has indeed been innovation in the way we do business. The innovation of specification, selection and maintenance tools fundamentally changed what we deliver to the customer. Technology has transformed our business from being "just a vendor" to that of a partner working to assure that the business, process, energy and environmental objectives of clients are met with properly specified, designed and installed systems.

We’ve got drivers out there that are forcing us to change. And while we resist…the ‘green’ movement, voluntary codes and standards, government programs calling for more aggressive approaches to emission reduction and energy conservation are providing us with opportunities to demonstrate that insulated technologies are a viable solution. We need to quit resisting…take advantage of what’s happening – get our people trained, communicate more effectively to energy users, and use the technology tools out there to make the decision to insulate an easy one.

Maybe that’s it. We all know insulation’s true value. But we’re always waiting to be asked. We’re always waiting for something else to be the driver.

We need to get in the driver’s seat. There are some big things happening in our ever-growing energy and environmentally conscious world. We all need to step outside the box (manufacturers, distributors, contractors) and think about how we should do things differently. Should our products look the same; should they go to the market the same way, and will product innovation eventually drive installation precision and ease?

Final Question…I ask you, our industry members and industry readers, if we could develop a ‘product’ and bring it to market knowing all that we know now, what would it be, what would it do, how would it work?

Maybe that’s the subject for next year’s forum.

Figure 1

Howard Wiltshire, C.E. Thurston & Sons

Figure 2

Paul Stonebraker, TRA Thermatech

Figure 3

Michael P. Sanders, Sunoco, Inc.

Figure 4

H. Vaughan Privett, C.E. Thurston & Sons

Figure 5

Kenneth D. Mentzer, North American Manufacturers Association

Figure 6

Kirk Liddell, Irex Corp.

Figure 7

Kathie M. Leonard, Auburn Manufacturing

Figure 8

Gary Kuzma PE, MEP Engineering, HOK, Inc.

Figure 9

Ronald (Ron) L. King, Specialty Products & Insulation Co.

Figure 10

Jim Getgood, Industrial Specialties LLC

Figure 11

Dr. Anthony Wright, Oak Ridge National Laboratory

NIA Sites > Insulation Outlook Magazine > Global

A Different Perspective

It has long been evident to those in the steam-generating industry and to those closely connected with the power generating industry that a gap exists in the understanding of pricing major projects that extend over long time periods. The power-generating industry can save millions of dollars by understanding the problems associated with these extensive pricing projects. Understanding the difference between the marketing/sales view versus the accounting view of pricing as well as knowing the long-term effect that pricing has upon the power-generating industry can offer huge savings as a result of this practical knowledge.

In an effort to fill the gap, here is practical information to raise the awareness and understanding of marketing and pricing as applied to long-term, multi-million-dollar projects with long-term deliveries such as new power generating boilers or air pollution equipment. The comments and considerations as presented do not necessarily apply to short-term projects or off-the-shelf items.

Many power and OEM (Original Equipment Manufacturer) companies accept bids from other companies (i.e. construction companies, contractors, material suppliers, etc.) without the understanding of the bidding process. Otherwise, they would not accept half of the bids they receive. Many people in the power-generating industry think of pricing as a cost plus a markup. This type of thinking is driven by accounting and not pricing and may cost the power-generating industry millions of dollars through paying more for their new steam-generating boiler, air pollution equipment, and for bril (brick, refractory, insulation and lagging). These are all major energy-saving components found at all steam-generating facilities.

Prior to the 1960s, all the major OEMs had marketing and pricing departments that acted independently from their accounting department. The accounting department would assign an accountant to work with the pricing department. The price developed would then be given to the sales department for the purpose of negotiating a contract. This all began to change in the 1960s.

Starting in the early ’60s, the boiler industry developed membrane tube wall construction. This led to the ability to make larger, higher-capacity boilers. The capacity or size of the boilers began to increase from 100-250 megawatt to 300-600 megawatt to 1000 megawatt boilers. This meant that the contract values also began to grow from a million dollars to fifty million dollars to one-hundred million dollars. The manufacturing and engineering time also grew from an average of six months to time periods of three to five years. This led to a decrease in the number of bidding opportunities. Instead of a company wanting two or three small boilers, it now could buy one very large boiler. Therefore, competitive pricing increased as the number of bidding opportunities decreased. Handshake deals were out and customers became more budget-conscious with the larger expenditures. It became more important than ever to evaluate the price, the design, the terms, and the conditions of that price.

With the increase in new boiler demand, it was imperative that marketing and pricing work together. However, as marketing and pricing were partnered together, the accounting and pricing departments were kept separate, creating a system of checks and balances.

Going back only 20 years ago, it was clearly understood that these departments had specific responsibilities. For example: The marketing department was responsible for setting the goals of the company. The pricing department was responsible for achieving those goals and would be held accountable for the future of the company. The accounting department was responsible for reporting what was current on that day at that day’s dollars and on the progress of achieving the company goals. The process of submitting a bid to a power company was done through the pricing department to the marketing/sales department and reported and tracked daily by the accounting department.

The pricing that was bid (bid price) and ultimately accepted by the power-generating companies during this time period goes much deeper than cost + mark up = selling price. There were many factors or strategies that were taken into consideration before a bid price was submitted. These were strategies that worked for the power generating industry.

A bid price is more than a dollar value. It is formula tied to a predetermined set of terms and conditions. A bid price is a price that is given (or accepted) on a real project that is to be completed in a specific time period and tied to a predetermined set of terms and conditions. The formula for a bid price is given as: 1) an adjustable price*, 2) a firm price** or 3) a combination of the two.

*An adjustable price is a price given in current day dollars subject to an adjustment based on various published indices (i.e. steel, labor rates, etc). The cost of a project will develop over a long period of time from bid date to construction date. However, most manufacturing costs are usually stable for at least six months. The exposure to risk is greater for the buyer because of the potential changes in the indices.

**A firm price is not subject to adjustment and is a fixed price based on a delivery and installation time specified. The exposure to risk is equal for both the buyer and the bidder.

Along with these types of bids, a bid price can be broken down to a material supply only or coupled with installation. Both the material and labor can be quoted to separate terms and conditions and different types of bid price. For example, the material price can be quoted part firm and part escalatable while the labor portion can be totally adjustable based on man-hours, labor rates, etc.

In years past, the pricing submitted would be based on a marketing strategy. The marketing strategy would be based on the market conditions of competition as well as the manufacturing considerations and would be used to set a sort of "competition pricing." This price would be set based on market value, market strategy for negotiations, future opportunities, duplications and the company’s need for work. (Note that costs were yet to be considered in the pricing decision.)

Then, after this price had been established, it would be evaluated against the company’s cost. But what is cost?

Cost is the sum total of the fixed and variable expenses to manufacture a product. Fixed costs include the expense of running the business (rent, utilities, office equipment, insurance, salaries, depreciation and property taxes). Variable costs that include raw materials, hourly wages paid to laborers and contractors, warehouse and shipping costs and manufacturing efficiencies (efficiencies covering shop loading, employee attitudes, and the use of new or antiquated equipment).

Having evaluated some of the pricing and strategy, the pricing department must now look at costs. This review of costs is required and necessary for two important reasons:

1) To analyze the effect the theoretical costs have on the projected bid price where price and cost deviate

2) To act as a watchdog on the accounting department.***

***We are all aware of the recent disclosures in the media relating to accounting misreporting and projections of profit and loss. This would never have happened if the accounting projections of profit and loss had been reviewed, understood, and/or challenged by another independent group (i.e. pricing department).

What is wrong with a bid price that is based on cost only (i.e. price = cost + markup) versus a price based on a pricing strategy as described above? First, a bid price based on cost only does not recognize the magnitude of the dollars involved but favors the smaller projects and overprices and potentially loses the larger projects. For example:

An accounting-driven company that has established their standard markup to be 30% [20% covering G&A (general & accounting cost) and 10% profit] would prefer offering a price of $100,000 rather than $1,000,000 with a 15% markup. The accounting-driven company is stuck on G&A. The G&A to these types of companies are a fixed percentage, which makes the $1,000,000 bid a negative net profit because the 15% will not cover their established G&A rate of 20%. The smaller $30,000 gross profit price ($100,000 x 30%) is more desirable compared to the larger gross profit amount of $150,000 ($1,000,000 x 15%) simply because of percentages. Therefore, an accounting-driven company would increase the markup to 20%. Their only reason for this increase would be to achieve their vision of what is profit and loss and company G&A.

Secondly, a bid price that is based on cost may include accounting adders for covering shop inefficiencies and projected labor rate increases. When a bid price is based on cost then that cost is affected by a labor rate increase that will then be static for a semiannual or annual period of time causing a current day spike in costs. This will have an adverse affect upon a large project that spans years (i.e. a new steam-generating boiler).

A marketing-driven company takes into consideration four simple rules and sets their pricing based on the market value, marketing strategy for negotiations, future opportunities and duplications, and the company’s need for work. The four simple rules are:

Rule 1: A price being offered should always ignore poor shop performance as a basis of cost structure because you cannot sell inefficiency.

Rule 2: A bid price should always reflect the "conditions" of the day.

This rule covers a wide range of conditions such as the market conditions (i.e. number of available opportunities), competitive condition (how many bidders and who), manufacturing needs (shop loading), future long term business (possible duplications with other customers), corporate conditions (profits and cost recoveries), the bid price formula (the customer’s terms and conditions, and your company cash flow) and the economic conditions (inflation or deflation, interest rates). Typical questions: What is the number of acceptable bidders and their needs for the contract? What is the number of contracts possible on the horizon? What are the company’s own needs for the contract? What is the possibility of future duplication?

Rule 3: A bid price must recognize design considerations.

This rule covers such things as unit efficiency, inputs and outputs, and the advantages and disadvantages with respect to competitor designs. Typical questions: What is the customer asking for? Why or how will the unit or equipment being offered meet the customer’s desires? How does the unit or equipment design as requested by the customer meet or compare with the company’s own standards? What has impacted the design and the affect on competitive design? Do the specifications favor the competition? Does the bid meet the specifications?

Rule 4: A bid price must take into consideration the customer’s financial position.

What this means is the type of price you offer should take into consideration the customer’s financial conditions and cash flow needs. Typical questions: Will there be any up-front payments or delay terms? Can the customer pay for what is being offered? Does the customer understand the costs involved with what was specified? Will the customer accept changes or properly evaluate the bid changes? Will the customer negotiate?

As you can see, the difference between an accounting-driven company and a marketing-driven company is as different as night and day. An all-important point to remember is that a price accepted can have a lasting effect upon the market, your relationship with your contractors or material suppliers and with the power-generating industry as a whole. A typical example in the power generating industry is:

A power-generating company asks for help because they have a lagging and insulation** design and installation problem. However, the real problem was actually their perception of cost and the type of contract that they had awarded. They awarded the project to the lowest bidder and made the contract time and material. This opened a whole set of new problems. The contractor’s productivity slowed to a snail’s pace; the schedule was impacted, and the lagging had to be installed over the insulation while the boiler was running. The power-generating company had been provided with enough information (quantitative take-offs, specifications, drawings and schedule) that would have allowed them to go out for bids on a firm price. Unfortunately, what they saw were dollars at the fixed amount that seemed much higher than what they thought the costs would be if they allowed the contractor to work on a time and material contract. This type of example and problem occurs often in the power-generating industry.

** Insulation and lagging are key components of any steam-generating facility that is vital for efficient boiler operation, necessary for personnel protection, required for heat conservation, and if installed and designed correctly, will save energy and money at a rate that is essential for efficient plant operation. The problem, as described above, is a typical example, but one that does not take into account boiler-construction-schedule delays or OEM material delivery delays that always impact the insulation and lagging installation and cost.

Another example is the common practice of accepting partnering-type contracts with OEMs to meet their NOx emission or new boiler requirements. A partnering-type contract is a relationship established between a manufacturer (with or without construction) and the power plant to sole source the entire project. The cost projected by the OEM is usually a "not-to-exceed" dollar amount with incentives given to the OEM for completing early or under the projected total man-hours. Unfortunately, the cost or man-hours established offer no assurance that after the project is completed, the final costs to the power plant will be less or equal to that which was originally bid. If the original projected dollars are set high, then the odds are they will be completed under budget. A partnering-type contract almost always favors the OEM or construction company and not the power plant and does not reflect a market value for the work to be supplied or installed.

Conclusion

Understanding marketing and pricing is needed because the dollar value of the bid price and the type of contract awarded have a direct effect upon the whole power-generating industry. This contributes to the market value (cost) of a new boiler, the air pollution system, or even the insulation and lagging. The size of a major project requires an in-depth understanding of marketing strategy, engineering, manufacturing and labor costs. The structuring of a bid price for these long-term projects should not be a cost plus markup approach as used on off-the-shelf goods. Reducing the cost to the power-generating industry will help reduce their initial capital cost. This means that good competitive pricing is needed from all sectors (manufacturers, contractors, material suppliers, etc.). The power companies need to take a long, hard look at the bid prices they accept. Our country’s energy is generated by the power industry, and all companies involved hold some measure of responsibility to help keep those costs down. It begins with understanding the power-generating market and the pricing that is accepted or presented.

Figure 1
Figure 2

New circulating fluid bed boiler

NIA Sites > Insulation Outlook Magazine > Global

Annual Energy Outlook: A Forecast of Natural Gas Market Trends

For almost four years, natural gas prices have remained at levels substantially higher than those of the 1990s. This has led to a reevaluation of expectations about future trends in natural gas markets, the economics of exploration and production, and the size of the natural gas resource. The Annual Energy Outlook 2004 (AEO2004) forecast reflects such revised expectations, projecting greater dependence on more costly alternative supplies of natural gas, such as imports of liquefied natural gas (LNG), with expansion of existing terminals and development of new facilities, and remote resources from Alaska and from the Mackenzie Delta in Canada, with completion of the Alaska Natural Gas Transportation System and the Mackenzie Delta pipeline.

Crude oil prices rose from under $20 per barrel in the late 1990s to about $35 per barrel in early 2003, driven in part by concerns about the conflict in Iraq, the situation in Venezuela, greater adherence to export quotas by members of the Organization of Petroleum Exporting Countries (OPEC), and changing views regarding the economics of oil production. AEO2004 reflects changes in expectations about the relative roles of various basins in providing future crude oil supplies.

Outside OPEC, the major sources of growth in crude oil production in the AEO2004 forecast are Russia, the Caspian Basin, non-OPEC Africa, and South and Central America. U.S. dependence on imported oil has grown over the past decade, with declining domestic oil production and growing demand. This trend is expected to continue. Net imports, which accounted for 54 percent of total U.S. petroleum demand in 2002-up from 37 percent in 1980 and 42 percent in 1990-are expected to account for 70 percent of total U.S. petroleum demand in 2025 in the AEO2004 forecast, higher than the Annual Energy Outlook 2003 (AEO2003) projection of 68 percent.

The change in expectations for future natural gas prices, in combination with the substantial amount of new natural-gas-fired generating capacity recently completed or in the construction pipeline, has also led to a different view of future capacity additions. Although only a few years ago, natural gas was viewed as the fuel of choice for new generating plants, coal is now projected to play a more important role, particularly in the later years of the forecast. In the AEO2004 forecast, beyond the completion of plants currently under construction, little new generating capacity is expected to be added before 2010. With a higher long-term forecast for natural gas prices, the competitive position of coal is expected to improve. As a result, cumulative additions of natural-gas-fired generating capacity between 2003 and 2025 are lower in the AEO2004 forecast than they were in AEO2003, and more additions of coal and renewable generating capacity are projected.

Economic Growth

In the AEO2004 reference case, the U.S. economy, as measured by gross domestic product (GDP), grows at an average annual rate of 3.0 percent from 2002 to 2025, slightly lower than the growth rate of 3.1 percent per year for the same period in AEO2003. Most of the determinants of economic growth in AEO2004 are similar to those in AEO2003, but there are some important differences. For example, AEO2004 starts with lower nominal interest rates than AEO2003; the rate of inflation is generally higher; and unemployment levels are higher. Consequently, differences between AEO2004 and AEO2003 cannot be explained simply by differences in GDP growth.

Energy Prices

In the AEO2004 reference case, the average world oil price increases from $23.68 per barrel (2002 dollars) in 2002 to $27.25 per barrel in 2003 and then declines to $23.30 per barrel in 2005. It then rises slowly to $27.00 per barrel in 2025, about the same as the AEO2003 projection of $26.94 per barrel in 2025 (Figure 1). Between 2002 and 2025, real world oil prices increase at an average rate of 0.6 percent per year in the AEO2004 forecast. In nominal dollars, the average world oil price is about $29 per barrel in 2010 and about $52 per barrel in 2025.

World oil demand is projected to increase from 78 million barrels per day in 2002 to 118 million barrels per day in 2025, less than the AEO2003 projection of 123 million barrels per day in 2025. In AEO2004, projected demand for petroleum in the United States and Western Europe and, particularly, in China, India, and other developing nations in the Middle East, Africa, and South and Central America is lower than was projected in AEO2003. Growth in oil production in both OPEC and non-OPEC nations leads to relatively slow growth in prices through 2025. OPEC oil production is expected to reach 54 million barrels per day in 2025, almost 80 percent higher than the 30 million barrels per day produced in 2002. The forecast assumes that sufficient capital will be available to expand production capacity.

Non-OPEC oil production is expected to increase from 44.7 to 63.9 million barrels per day between 2002 and 2025. Production in the industrialized nations (United States, Canada, Mexico, Western Europe, and Australia) remains roughly constant at 24.2 million barrels per day in 2025, compared with 23.4 million barrels per day in 2002. In the forecast, increased non-conventional oil production, predominantly from oil sands in Canada, more than offsets a decline in conventional production in the industrialized nations.

Average wellhead prices for natural gas (including both spot purchases and contracts) are projected to increase from $2.95 per thousand cubic feet (2002 dollars) in 2002 to $4.90 per thousand cubic feet in 2003, declining to $3.40 per thousand cubic feet in 2010 as the initial availability of new import sources (such as LNG) and increased drilling in response to the higher prices increase supplies. With the exception of a temporary decline in natural gas wellhead prices just before 2020, when an Alaska pipeline is expected to be completed, wellhead prices are projected to increase gradually after 2010, reaching $4.40 per thousand cubic feet in 2025 (equivalent to about $8.50 per thousand cubic feet in nominal dollars). LNG imports, Alaskan production, and lower 48 production from non-conventional sources are not expected to increase sufficiently to offset the impacts of resource depletion and increased demand. At $4.40 per thousand cubic feet, the 2025 wellhead natural gas price in AEO2004 is 44 cents higher than the AEO2003 projection. The higher price projection results from reduced expectations for onshore and offshore production of non-associated gas, based on recent data indicating lower discoveries per well and higher costs for drilling in the lower 48 States.

In AEO2004, the average mine mouth price of coal is projected to decline from $17.90 (2002 dollars) in 2002 to a low of $16.19 per short ton in 2016. Prices decline in the forecast because of increased mine productivity, a shift to western production, declines in rail transportation costs, and competitive pressures on labor costs. After 2016, however, average mine mouth coal prices are projected to rise as productivity improvements slow and the industry faces increasing costs to open new mining areas to meet rising demand. In 2025, the average mine mouth price is projected to be $16.57 per short ton, still lower than the real price in 2002 but considerably higher than the AEO2003 projection of $14.56 per short ton. In nominal dollars, projected mine mouth coal prices in AEO2004 are equivalent to $32 per short ton in 2025.

Average delivered electricity prices are projected to decline from 7.2 cents per kilowatt hour in 2002 to a low of 6.6 cents (2002 dollars) in 2007 as a result of cost reductions in an increasingly competitive market-where excess generating capacity has resulted from the recent boom in construction-and continued declines in coal prices. In markets where electricity industry restructuring is still ongoing, it contributes to the projected price decline through reductions in operating and maintenance costs, administrative costs, and other miscellaneous costs. After 2007, average real electricity prices are projected to increase, reaching 6.9 cents per kilowatt-hour in 2025 (equivalent to 13.2 cents per kilowatt hour in nominal dollars). In AEO2003, real electricity prices followed a similar pattern but were projected to be slightly lower in 2025, at 6.8 cents per kilowatt-hour. The higher price projection in AEO2004 results primarily from higher expected costs for both generation and transmission of electricity. Higher generation costs reflect the higher projections for natural gas and coal prices in AEO2004, particularly in the later years of the forecast.

Energy Consumption

Total primary energy consumption in AEO2004 is projected to increase from 97.7 quadrillion British thermal units (Btu) in 2002 to 136.5 quadrillion Btu in 2025 (an average annual increase of 1.5 percent). AEO2003 projected total primary energy consumption at 139.1 quadrillion Btu in 2025. The AEO2004 projections for total petroleum and natural gas consumption in 2025 are lower than those in AEO2003, and the projections for coal, nuclear, and renewable energy consumption are higher. Higher natural gas prices in the AEO2004 forecast, and the effects of higher corporate average fuel economy (CAFE) standards for light trucks in the transportation sector, are among the most important factors accounting for the differences between the two forecasts.

Delivered commercial energy consumption is projected to grow at an average annual rate of 1.7 percent between 2002 and 2025, reaching 12.2 quadrillion Btu in 2025 (slightly less than the 12.3 quadrillion Btu projected in AEO2003). The most rapid increase in energy demand is projected for electricity used for computers, office equipment, telecommunications, and miscellaneous small appliances. Commercial floor space is projected to grow by an average of 1.5 percent per year between 2002 and 2025, identical to the rate of growth in AEO2003 for the same period.

Delivered industrial energy consumption in AEO2004 is projected to increase at an average rate of 1.3 percent per year between 2002 and 2025, reaching 33.4 quadrillion Btu in 2025 (lower than the AEO2003 forecast of 34.8 quadrillion Btu). The AEO2004 forecast includes slower projected growth in the dollar value of industrial product shipments and higher energy prices (particularly natural gas) than in AEO2003; however, those effects are offset in part by more rapid projected growth in the energy-intensive industries.

Delivered energy consumption in the transportation sector is projected to grow at an average annual rate of 1.9 percent between 2002 and 2025 in the AEO2004 forecast, reaching 41.2 quadrillion Btu in 2025 (2.5 quadrillion Btu lower than the AEO2003 projection). Two factors account for the reduction in projected transportation energy use from AEO2003 to AEO2004. First is the adoption of new Federal CAFE standards for light trucks-including sport utility vehicles. The new CAFE standards require that the light trucks sold by a manufacturer have a minimum average fuel economy of 21.0 miles per gallon for model year 2005, 21.6 miles per gallon for model year 2006, and 22.2 miles per gallon for model years 2007 and beyond. (The old standard was 20.7 miles per gallon in all years.) As a result, the average fuel economy for all new light-duty vehicles is projected to increase to 26.9 miles per gallon in 2025 in AEO2004, as compared with 26.1 miles per gallon in AEO2003. Second is the lower forecast for industrial product shipments in AEO2004, leading to a projection for freight truck travel in 2025 that is 7 percent lower than the AEO2003 projection.

Total electricity consumption, including both purchases from electric power producers and on-site generation, is projected to grow from 3,675 billion kilowatt-hours in 2002 to 5,485 billion kilowatt-hours in 2025, increasing at an average rate of 1.8 percent per year (slightly below the 1.9-percent average annual increase projected in AEO2003). Rapid growth in electricity use for computers, office equipment, and a variety of electrical appliances in the residential and commercial sectors is partially offset in the AEO2004 forecast by improved efficiency in these and other, more traditional electrical applications, by the effects of demand-side management programs, and by slower growth in electricity demand for some applications, such as air conditioning, which have reached near-maximum penetration levels in regional markets.

Total demand for natural gas is projected to increase at an average annual rate of 1.4 percent from 2002 to 2025. From 22.8 trillion cubic feet in 2002, natural gas consumption increases to 31.4 trillion cubic feet in 2025 (Figure 2), primarily as a result of increasing use for electricity generation and industrial applications, which together account for almost 70 percent of the total projected growth in natural gas demand from 2002 to 2025. However, the annual rate of increase in natural gas demand varies over the projection period. In particular, the growth in demand for natural gas slows in the later years of the forecast (growing by 1.6 percent per year from 2002 to 2020, as compared with 0.6 percent per year from 2020 to 2025), as rising prices for natural gas make it less competitive for electricity generation. The AEO2004 projection for total consumption of natural gas in 2025 is 3.5 trillion cubic feet lower than in AEO2003.

In AEO2004, total coal consumption is projected to increase from 1,066 million short tons (22.2 quadrillion Btu) in 2002 to 1,567 million short tons (31.7 quadrillion Btu) in 2025. From 2002 to 2025, coal use (based on tonnage) is projected to grow by 1.7 percent per year on average, compared with the AEO2003 projection of 1.4 percent per year. From 2002 to 2025, on a Btu basis, coal use is projected to grow by 1.6 percent per year. (Because of differences in the Btu content of coal across the Nation and changes in the regional mix of coal supply over time, the rate of growth varies, depending on whether it is measured in short tons or Btu.) The primary reason for the change in the rate of growth is higher natural gas prices in the AEO2004 forecast. In AEO2004, total coal consumption for electricity generation is projected to increase by an average of 1.8 percent per year (1.7 percent per year on a Btu basis), from 976 million short tons in 2002 to 1,477 million short tons in 2025, compared with the AEO2003 projection of 1,350 million short tons in 2025.

Total petroleum demand is projected to grow at an average annual rate of 1.6 percent in the AEO2004 forecast, from 19.6 million barrels per day in 2002 to 28.3 million barrels per day in 2025 AEO2003 projected a 1.8-percent annual average growth rate over the same period. The largest share of the difference between the two forecasts is attributable to the transportation sector. In 2025, total petroleum demand for transportation is 1.2 million barrels per day lower in AEO2004 than it was in AEO2003.

Total renewable fuel consumption, including ethanol for gasoline blending, is projected to grow at an average rate of 1.9 percent per year, from 5.8 quadrillion Btu in 2002 to 9.0 quadrillion Btu in 2025, primarily as a result of State mandates for renewable electricity generation. About 60 percent of the projected demand for renewables in 2025 is for grid-related electricity generation (including combined heat and power), and the rest is for dispersed heating and cooling, industrial uses, and fuel blending. Projected demand for renewables in 2025 in AEO2004 is 0.2 quadrillion Btu higher than in AEO2003, with more wind and geothermal energy consumption and less biomass fuel consumption expected in the AEO2004 forecast.

Total demand for natural gas is projected to increase at an average annual rate of 1.8 percent between 2001 and 2025 (Figure 2), from 22.7 trillion cubic feet to 34.9 trillion cubic feet, primarily because of rapid growth in demand for electricity generation. With higher projected prices, total natural gas demand in 2020 (32.1 trillion cubic feet) is projected to be 1.6 trillion cubic feet lower in AEO2003 than in AEO2002.

In AEO2003, total coal consumption is projected to increase from 1,050 to 1,444 million short tons between 2001 and 2025, an average increase of 1.3 percent per year. Projected total coal demand in 2020 (based on short tons) is almost identical to that in AEO2002 despite some shifts between sectors. Industrial coal demand is lower and electricity generation coal demand is higher in AEO2003 as a result of the definitional changes in the data mentioned above and higher natural gas prices in AEO2003 that lead to higher projected demand for coal in the electric power sector.

Total petroleum demand is projected to grow at an average annual rate of 1.7 percent through 2025 (reaching 29.17 million barrels per day), led by growth in the transportation sector, which is expected to account for about 74 percent of petroleum demand in 2025. Projected demand in 2020 (27.13 million barrels per day) is higher than in AEO2002 by 470 thousand barrels per day due to higher transportation demand.

Total renewable fuel consumption, including ethanol for gasoline blending, is projected to grow at an average rate of 2.2 percent per year through 2025, primarily due to State mandates for renewable electricity generation. About 55 percent of the projected demand for renewables in 2025 is for electricity generation and the rest for dispersed heating and cooling, industrial uses (including CHP), and fuel blending. The projected demand for renewables in 2020 in AEO2003 is 0.6 quadrillion Btu lower than in AEO2002, reflecting an update in historical statistics primarily regarding electricity generation at pulp and paper plants that lowers the expectation for biomass use at industrial CHP plants.

Energy Intensity

Energy intensity, as measured by energy use per dollar of GDP, is projected to decline at an average annual rate of 1.5 percent in the AEO2004 forecast, with efficiency gains and structural shifts in the economy offsetting growth in demand for energy services (Figure 3). This rate of improvement, the same as projected in AEO2003, is generally consistent with recent historical experience. With energy prices increasing between 1970 and 1986, energy intensity declined at an average annual rate of 2.3 percent, as the economy shifted to less energy-intensive industries, product mix changed, and more efficient technologies were adopted. Between 1986 and 1992, however, when energy prices were generally falling, energy intensity declined at an average rate of only 0.7 percent a year. Since 1992, it has declined on average by 1.9 percent a year.

Electricity Generation

In the AEO2004 forecast, the projected average price for natural gas delivered to electricity generators is 25 cents per million Btu higher in 2025 than was projected in AEO2003. As a result, cumulative additions of natural-gas-fired generating capacity between 2003 and 2025 are lower than projected in AEO2003, generation from gas-fired plants in 2025 is lower, and generation from coal, petroleum, nuclear, and renewable fuels is higher. Cumulative natural gas capacity additions between 2003 and 2025 are 219 gigawatts in AEO2004, compared with 292 gigawatts in AEO2003. The AEO2004 projection of 1,304 billion kilowatt-hours of electricity generation from natural gas in 2025 is still nearly double the 2002 level of 682 billion kilowatt-hours (Figure 4), reflecting utilization of the new capacity added over the past few years and the construction of new natural-gas-fired capacity later in the forecast period to meet increasing demand and replace capacity that is expected to be retired. Less new gas-fired capacity is added in the later years of the forecast because of the projected rise in prices for natural gas and the current surplus of capacity in many regions of the country. In AEO2003, 1,678 billion kilowatt-hours of electricity were projected to be generated from natural gas in 2025.

The natural gas share of electricity generation (including generation in the end-use sectors) is projected to increase from 18 percent in 2002 to 22 percent in 2025 (as compared with 29 percent in the AEO2003 forecast). The share from coal is projected to increase from 50 percent in 2002 to 52 percent in 2025 as rising natural gas prices improve the cost competitiveness of coal-fired technologies. AEO2004 projects that 112 gigawatts of new coal-fired generating capacity will be constructed between 2003 and 2025 (compared with 74 gigawatts in AEO2003).

Nuclear generating capacity in the AEO2004 forecast is projected to increase from 98.7 gigawatts in 2002 to 102.6 gigawatts in 2025, including uprates of existing plants equivalent to 3.9 gigawatts of new capacity between 2002 and 2025. In AEO2003, total nuclear capacity reached a peak of 100.4 gigawatts in 2006 before declining to 99.6 gigawatts in 2025. In a departure from AEO2003, no existing U.S. nuclear units are retired in the AEO2004 reference case. Like AEO2003, AEO2004 assumes that the Browns Ferry nuclear plant will begin operation in 2007 but projects that no new nuclear facilities will be built before 2025, based on the relative economics of competing technologies.

Renewable technologies are projected to grow slowly because of the relatively low costs of fossil-fired generation and because competitive electricity markets favor less capital-intensive technologies in the competition for new capacity. Where enacted, State renewable portfolio standards, which specify a minimum share of generation or sales from renewable sources, are included in the forecast. The production tax credit for wind and biomass is assumed to end on December 31, 2003, its statutory expiration date at the time AEO2004 was prepared.

Total renewable generation, including combined heat and power generation, is projected to increase from 339 billion kilowatt-hours in 2002 to 518 billion kilowatt-hours in 2025, at an average annual growth rate of 1.9 percent. AEO2003 projected slower growth in renewable generation, averaging 1.4 percent per year from 2002 to 2025.

Energy Production and Imports

Total energy consumption is expected to increase more rapidly than domestic energy supply through 2025. As a result, net imports of energy are projected to meet a growing share of energy demand (Figure 5). Net imports are expected to constitute 36 percent of total U.S. energy consumption in 2025, up from 26 percent in 2002.

Projected U.S. crude oil production increases from 5.6 million barrels per day in 2002 to a peak of 6.1 million barrels per day in 2008 as a result of increased production offshore, predominantly from the deep waters of the Gulf of Mexico. Beginning in 2009, U.S. crude oil production begins a gradual decline, falling to 4.6 million barrels per day in 2025-an average annual decline of 0.9 percent between 2002 and 2025. The AEO2004 projection for U.S. crude oil production in 2025 is 0.7 million barrels per day lower than was projected in AEO2003. The projections for Alaskan production and offshore production in 2025 both are lower than in AEO2003 (by 660,000 and 120,000 barrels per day, respectively), based on revised expectations about the discovery of new speculative fields in Alaska and on an update of the cost of offshore production.

Total domestic petroleum supply (crude oil, natural gas plant liquids, refinery processing gains, and other refinery inputs) follows the same pattern as crude oil production in the AEO2004 forecast, increasing from 9.2 million barrels per day in 2002 to a peak of 9.7 million barrels per day in 2008, then declining to 8.6 million barrels per day in 2025 (Figure 6). The projected drop in total domestic petroleum supply would be greater without a projected increase of 590,000 barrels per day in the production of natural gas plant liquids (a rate of increase that is consistent with the projected growth in domestic natural gas production).

In 2025, net petroleum imports, including both crude oil and refined products (on the basis of barrels per day), are expected to account for 70 percent of demand, up from 54 percent in 2002. Despite an expected increase in domestic refinery distillation capacity of 5 million barrels per day, net refined petroleum product imports account for a growing portion of total net imports, increasing from 13 percent in 2002 to 20 percent in 2025 (as compared with 34 percent in AEO2003).

The most significant change made in the AEO2004 energy supply projections is in the outlook for natural gas. Total natural gas supply is projected to increase at an average annual rate of 1.4 percent in AEO2004, from 22.6 trillion cubic feet in 2002 to 31.3 trillion cubic feet in 2025, which is 3.3 trillion cubic feet less than the 2025 projection in AEO2003. Domestic natural gas production increases from 19.1 trillion cubic feet in 2002 to 24.1 trillion cubic feet in 2025 in the AEO2004 forecast, an average increase of 1.0 percent per year. AEO2003 projected 26.8 trillion cubic feet of domestic natural gas production in 2025.

The projection for conventional onshore production of natural gas is lower in AEO2004 than it was in AEO2003, because slower reserve growth, fewer new discoveries, and higher exploration and development costs are expected. In particular, reserves added per well drilled in the Mid-continent and Southwest regions are projected to be about 30 percent lower than projected in AEO2003. Offshore natural gas production is also lower in AEO2004 than in AEO2003 because of the tendency to find more oil than natural gas in the offshore and at higher costs than previously anticipated. Recent data from the Minerals Management Service show that about three-quarters of the hydrocarbons discovered in deepwater fields are oil, compared with 50 percent assumed in AEO2003. Conventional production of associated-dissolved and non-associated natural gas in the onshore and offshore remains important, meeting 39 percent of total U.S. supply requirements in 2025, down from 56 percent in 2002.

Growth in U.S. natural gas supplies will be dependent on unconventional domestic production, natural gas from Alaska, and imports of LNG. Total non-associated unconventional natural gas production is projected to grow from 5.9 trillion cubic feet in 2002 to 9.2 trillion cubic feet in 2025. With completion of an Alaskan natural gas pipeline in 2018, total Alaskan production is projected to increase from 0.4 trillion cubic feet in 2002 to 2.7 trillion cubic feet in 2025. The four existing U.S. LNG terminals (Everett, Massachusetts; Cove Point, Maryland; Elba Island, Georgia; and Lake Charles, Louisiana) all are expected to expand by 2007, and additional facilities are expected to be built in the lower 48 States, serving the Gulf, Mid-Atlantic, and South Atlantic States, with a new small facility in New England and a new facility in the Bahamas serving Florida via a pipeline. Another facility is projected to be built in Baja California, Mexico, serving the California market. Total net LNG imports are projected to increase from 0.2 trillion cubic feet in 2002 to 4.8 trillion cubic feet in 2025, more than double the AEO2003 projection of 2.1 trillion cubic feet.

As domestic coal demand grows in AEO2004, U.S. coal production is projected to increase at an average rate of 1.5 percent per year, from 1,105 million short tons in 2002 to 1,543 million short tons in 2025. Projected production in 2025 is 103 million short tons higher than in AEO2003 because of a substantial increase in projected coal demand for electricity generation resulting from higher natural gas prices. Production from mines west of the Mississippi River is expected to provide the largest share of the incremental production. In 2025, nearly two-thirds of coal production is projected to originate from the western States.

Renewable energy production is projected to increase from 5.8 quadrillion Btu in 2002 to 9.0 quadrillion Btu in 2025, with growth in industrial biomass, ethanol for gasoline blending, and most sources of renewable electricity generation (including conventional hydroelectric, geothermal, biomass, and wind). The AEO2004 projection for renewable energy production in 2025 is 0.2 quadrillion Btu higher than was projected in AEO2003 as a result of higher projections for electricity generation from geothermal and wind energy.

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NIA Sites > Insulation Outlook Magazine > Global

An Inside Look at Insulating the Largest Power Plant in the U.S.

Very few end-users understand the complexities of an insulation project. Nor should they, as they have their own share of ‘complexities’ to deal with. However, this article will give those who are interested a peek at what goes on behind the scenes of a very complex insulation project like this one at the Mystic Power Plant in Everett, Mass.

What is it like to be involved in the biggest insulation project your firm has ever undertaken? Just ask Ted Brodie, president and CEO of New England Insulation Company (NEIC) of Canton, Mass., who said, "Not only was it the biggest job we’ve ever been involved with in terms of volume, but it was the largest power plant under construction in the United States at the time." The project is the Mystic Power Plant, a combined cycle power generation facility, located on 19 acres of urban landscape along the Mystic River in Everett, Mass. Construction of the two 800-megawatt, natural gas-fueled power generators is complete. Unit 1 commenced operation in June and Unit 2 in July 2003. Because the power market in Massachusetts is deregulated, the electricity produced by the Mystic plant is sold on the open market to electrical grid utilities supplying residential, commercial and industrial customers.

Site Constraints Posed a Challenge

According to Blake Underhill, NEIC COO and general manager, supplying and installing insulation for the modern, efficient gas-fired plant proved to be challenging and, ultimately, immensely satisfying. One of the major challenges was the site itself. "It’s an urban site and very tight in terms of physical space," he explained. "The site already accommodates an existing oil/gas fired plant. Adding a new plant in physical space that had already been designed as optimum for the existing facility presented a significant challenge. Trying to incorporate the new capacity into the existing location meant that there was very limited access getting up and around the site, plus there was limited space available for on-site storage. This meant that the timing of product deliveries had to be optimized." NEIC coordinated many of their insulation deliveries through their warehouse and fabrication facility in Canton. According to Brodie, having the warehouse located 30 minutes from the job site, "meant we were able to ship materials to the job site on a daily basis, allowing us to apply the concept of ‘Just-in-Time’ to the construction site."

Fabrication Challenges Called for Creativity

Located about 20 miles from the Mystic site, the Canton Fab Shop had its own set of challenges. Fab Shop Foreman Tony Dumont and his team spent 15 months fabricating mitred fittings for the project. He explained the process, "This was a two-unit plant and the systems on each of the units are identical. Each system was broken down for us into pipe sizes and thicknesses, and into the number of fittings needed on each system. We fabricated more than 1,800 calcium silicate fittings and over 2,000 mineral wool fittings. Things changed every day. It was a real challenging job."

NEIC is one of the last companies in the area to still operate its own fab shop. When it comes to precise calculations, Dumont said, "Having your own fab facility makes a big difference. A lot of insulation contractors now ‘order out’ – they use companies that specialize in custom fabrication. But there are a lot of things they can’t do that we can." He added, "You can’t be guaranteed that things are going to fit right when you call in your order over the phone."

In addition to the Canton fab shop, NEIC set up two on-site fab operations for the fabrication of removable blankets and aluminum gore sets for fittings. Hundreds of specialized removable blankets for turbines and valves were fitted and assembled in these shops to ensure precise fit. Coordination between the off-site and on-site fab operations provided maximum productivity and attention to detail.

Supplier Partnering Needed to Overcome Inherent Challenges

Gas and steam turbine piping was vendor-supplied and was insulated with Japanese-produced calcium silicate furnished by the turbine manufacturer.

The remainder of the plant’s piping systems, however, was insulated with mineral wool pipe insulation. Roxul Inc. of Milton, Ontario furnished over 110,000 linear feet of Roxul 1200 Preformed Pipe Insulation. Because of the size of the project and the challenge of minimal on-site storage, the concept of partnering took on added meaning. "Because of the constraints of the site, NEIC needed a partner rather than just a supplier," said Kevin MacKinnon, Roxul’s U.S. Business Development Manager. "We really had to work closely together on this project. We had to share information. We had to make sure we had enough product in the flow at all times. We had a backup supply of product in our plant so that we were always able to respond quickly as the different releases came along. No matter how much we planned ahead, things came up quickly where a certain size was needed and we had to deliver on a certain day. By being able to share information, and by everyone cooperating in terms of making sure we had enough product in the channel, we were able to make it all go smoothly."

The Mystic project was a very large job for Roxul. According to MacKinnon, "It was one of the biggest jobs going in our industry last year, a high profile job with a high profile customer. In order to make it work, you need to have complete trust in the people you work with. It all came together on this job. NEIC is well recognized in our industry. They are the kind of people you really want to work with."

Insulators Hired from Across the U.S.

The amount of manpower required for the job was staggering, according to Paul Ainsworth, NEIC’s on-site project manager. "The crew grew to as many as 275 workers," he said. "We knew it wouldn’t be easy getting local insulators because Boston was experiencing full employment. Before the job started we sat down with Asbestos Workers Local 6 Boston Business Manager Fran Boudreau and discussed our situation. He was extremely helpful. For example, there were times when we would need 75 people for a two- to three-week period. Boudreau would place the calls across the country. He would come back and say, ‘I know you wanted 75 but I can give you 50 this week and 25 next week. We ended up having labor from 41 different locals across the country. I can’t say enough about the support that Local 6 gave us. They were tremendous. They met every one of our requests for manpower."

With insulators coming from all parts of the country, standardizing the workmanship posed a challenge according to General Foreman Glenn Stevenson, who has been with NEIC for over 30 years. "We had a lot of talented craftsmen with unique methods of application on the project. Our foremen didn’t really have to train them. They just had to figure out what they did best and put them where they belonged. One of our goals was that when the project was complete you wouldn’t be able to distinguish between the different units. We met that goal."

Stevenson and Jack Lister (general foreman, night shift) ran the 275-man crew with the assistance of 25 foremen. They faced some very aggressive schedules, and met every first fire date, adhered to every aspect of project specification and ensured a safe work environment for the NEIC crew. "We got to the job site almost a year late," explained Lister. "The design contractor tried to hold us to the original schedule, which was next to impossible. At one time the day shift and the night shift were up to 120 men on each 10-hour shift. Whenever they needed us to be there to turn on a certain system, we were able to satisfy their needs. We never held things up."

Scaffolding was initially a problem, said Stevenson. Much of it was built for other trades. "Some of the insulation was up to 6′ thick and made it difficult to put on the insulation," said Stevenson. "We convinced the design contractor to give us our own scaffold builders. We trained them and everything worked out well. This kind of cooperation reflected the excellent partnership on the project."

Scope of Project Demanded Careful Tracking

Because of the scope of the project, NEIC developed a unique system to track in great detail the hours expended insulating each system in different areas. "This was part of our compliance with the cost control requirements of our contract," explained Ainsworth. Ainsworth, who’s been at NEIC for about 20 years, believes it’s the most elaborate system he’s ever seen. "We even had a full-time cost-control person on site for this job," he said. "This was the biggest job we’ve ever had so project controls had to work hand-in-hand."

Planning, ordering, and tracking material deliveries to have the right material on site when it was needed was also a crucial part of the project management system. Fabricated items and accessories had to arrive in sequence with materials shipped directly from suppliers. All of this was coordinated by NEIC’s project management team.

When it Comes to Safety – People are More Important than the Job

When it came to ensuring the safety of insulators, NEIC Safety Director Dan Gill was assigned to the Mystic project full time. "We had men and women working on scaffolding, on all kinds of heights, and in all kinds of situations: on hot piping, confined spaces, ladders, etc.," said Gill. "Because of the size of the project, and with so many insulators arriving from all across the country, it was absolutely essential to bring them on board regarding NEIC’s safety philosophy before letting them out on the job site."

All new hires had to go through a three-hour orientation in which the company impressed upon them that people are more important than the job. Safety awareness was stressed. Craft personnel were encouraged to think of their families and the impact of a job site injury on them and not just the worker. At times, NEIC had more than 275 people on site involved in installing the insulation and the lagging on two shifts. For that many people, it took a full-time person to make sure the training was completed and safety procedures maintained.

The proof was in the results. "The Mystic project was a very, very successful project when measured by minimal incidents, injuries, and OSHA recordables," said Gill. Another significant OSHA number is the ‘lost time accident’ statistic. New England completed this project without a single lost-time accident – not one lost hour. The excellent safety record reflects NEIC’s commitment to safety.

Project Required a Unique Contract

The size and scope of the Mystic project required a unique approach to contract negotiation. According to Brodie, "The project was done on a cost-plus basis instead of a hard-money basis. We were reimbursed for our costs as we incurred them plus a percentage to cover our overhead and a small amount for profit. We committed to the design constructor that we would limit the amount of new work that we would take on until the project was 70 percent complete so that we could devote the energies of our key people to this one project. Rather than the standard contractor/subcontractor relationship we wanted to feel that we were all in this together. We were definitely partners in trying to get the job done in the most efficient way possible." It was quite a unique contract, explained Ainsworth.

"We agreed to establish a management team on site – myself, our safety director, our cost controller and our field engineering team. We made a unique approach to be dedicated to the project. Having management staff people on site at all times was key. As the need arose, we would supplement the on-site staff to meet the goals of the project as they changed," said Ainsworth.

Teamwork Was Key to Success

"You need the support of others on a job this size," said Ainsworth. "You have to work together. It’s a lot of give and take. It’s been challenging at best. It’s been a great experience." To show his appreciation, Ainsworth recently wrote to all 41 Locals across the country that had supported Local 6 Boston in supplying insulators for the Mystic project. He wrote: "Your local was one of 41 which supported Local 6 Boston in getting this project done. We are proud of the comments NEIC received for our outstanding safety program and quality of workmanship and ask you to pass on our gratitude to your members who worked on this project." He concluded: "The Mystic project has certainly been challenging but with labor and management working together as a team we can take pride in the fact that we did a great job."

For more information on this story, contact Dick Doherty at New England Insulation Company at 781-828-6600.

Figure 1

Two onsite operations were set up to fabricate removable blankets.

Figure 2

It took 15 months to fabricate the mitred fittings for the job.

Figure 3

Having the Canton Fab Shop guarranteed the fittings were sized and fit correctly.

Figure 4

More than 1,800 mitred cal si fittings were on the job.

Figure 5

The on-site Fab Shop at Mystic.

Figure 6

Piping and remole blankets.

NIA Sites > Insulation Outlook Magazine > Global

The Top 10 Mistakes in Managing Safety Performance

Mistake Number 6: Measuring safety performance differently than the rest of the business. "If you can’t measure it, you can’t manage it."

The people running operations–making the product, delivering the service, handling the materials-really are world class when it comes to measuring how well their business is performing. They’re all over all the important details of how much, how well, how often. If the operation is performing well, they can tell you why; if it isn’t, they know all about the problems. It’s all part of running the business.

It reminds us of world-class athletes like Tiger Woods, and how well they understand exactly what they’re doing.

It’s not exactly a coincidence that the sophistication and level of intensity of performance measurement we see in operations match the measurement regimen of world-class athletes. It wasn’t always that way. In the last 30 years–the working career of our generation of managers–business operations and competitive athletics witnessed a revolution in the practice of performance measurement.

For most of the 20th century, competitive athletes learned how to play the game by copying what others did. They would improve on that by the combination of their own natural talent, conversations with other players, and trial and error during practice.

By the 1970s, technology began to enter the equation. Many believe that the most revolutionary technology was the equipment itself. Sure, equipment plays a role-in sports such as golf and the pole vault-but not in baseball, swimming, or track. The more interesting–and we would argue more powerful–effect of technology on athletic performance has been in measuring, evaluating and training.

High-resolution, slow-motion video has given coaches the ability to discern the fine movements and body positions that account for a significant part of sports performance. On the practice field and in competition, thorough and exhaustive measurement of every aspect of performance has become commonplace. It’s no longer just about the scoreboard: in football, the performance numbers that coaches are paying attention to are metrics such as average gain on first down, average gain per pass attempted, and the ratio of runs to passes.

For the individual athletes, the gym has been renamed the fitness center, where you’ll find practically every competitive athlete in every sport in the world. (OK, we’ll leave bowling off that list. Some things will never change.) Measurement of individual performance by sport and position is now the standard. Upper-body strength is measured by bench press for offensive linemen; speed in the 40-yard dash for linebackers and wide receivers; vertical leap for basketball players.

While athletes were using measurement to dramatically improve, those of us in operations were doing exactly the same, following the same approach. Our version of high-resolution slow motion video was computer technology. We made great use of the microchip to improve the performance of our equipment and our people. Our coaches and trainers were some of the best brains to be found in the world of quality improvement, work process re-engineering, and business management: names like Deming, Drucker, and Campy.

It’s a great story, and one of which we can be justifiably proud.

Since we all knew the most important part of our job as managers was sending people home safe, you’d think the next place we’d apply what we learned about performance measurement was to managing safety. While that makes perfect sense, it’s not what most of us did.

Measuring: Business and Safety

Sure, we kept lots of numbers and statistics about how our safety performance was going. We made many decisions based on what we thought the numbers were telling us. The differences between how we used performance measures for the business and how we used numbers to manage safety were startling.

Business measures are easy to understand; safety measures are not.

We could have easily explained any of our business performance measures to our fifth-grade sons and daughters. Production gets measured in barrels, truckloads, boxes, and feet. Cost gets measured in dollars and compared to budgets; quality by the number of conforming products and customer complaints; schedule in hours, milestones, and percentage complete.

Every one of our kids could understand these measures. More importantly, so could our employees.

As for safety, we lived and died by the total recordable injury frequency rate.

Frequency rates may be a great idea for the safety staff or the president of the company, but they were pretty much useless to many of us out on the job. First, there’s the issue of what counts as an injury; there are volumes written on this one, much of that in government regulations that look like the tax code.

Have an injury in our department, and somebody would have to calculate a frequency rate for us. Our number went from zero to 60 faster than a stolen sports car. That’s because the rates are calculated based on manhours worked, which roughly equate to injuries per 100 workers per year. Rarely did we have 100 working people on this job, or the injury right at the end of the year.

Of course, we’d post the rate on the sign at the gate so everyone could see it, and even had pay bonuses based on the rate. But only the guys over in the safety office could tell us what the rate actually meant.

What kind of a performance measure is that?

Everybody in operations kept score for the business; the safety office told us how well we were doing at safety.

Every shift, our staff added up their business performance numbers. Because they helped collect the data, they knew all about the numbers and the reasons why they were what they were. If you had a question about yesterday’s production or shipments, you could pick up the phone and ask the guy on the production line or in the warehouse what the story was. He’d tell you all about the reasons why production was up or shipments were down.

Our safety department counted the safety performance numbers. They’d get the medical reports; accident and near-miss reports, training records; and medical costs from the insurance carrier. Then they’d report the results to us (the managers).

That process usually left the rest of the organization out of the loop. We’d be the first to hear about problems and trends, and have nobody to ask about the trends or what was really going on. What kind of system is that?

For the business, we had lots of things to count; for safety, we often counted zeros.

We counted production in units-pounds, barrels, feet, dollars, and miles. There were plenty of those to count: everybody worked hard and produced much. Counting items was a huge part of our lives, as well it should be.

Fortunately, we seldom had anything to count for safety performance. People came in, worked and went home safe at the end of the day. That’s good news in every respect, but it did leave us counting a lot of zeros.

Zeros look good on the scoreboard. They weren’t of much use in telling whether our performance was getting better or worse. We’d go for a long stretch with no injuries. Then, bam, in a matter of a few weeks, we’d see a couple of injuries and that would send the injury rate off the charts. We were either doing great or doing awful, and we never could predict from the injury numbers what would happen in the future.

Everybody could tell good from bad performance for the business; for safety, sometimes we weren’t sure which direction was up.

Run a few weeks in a row at less than capacity, and everybody in the company knew there was a production problem. If we managed to come in below budget, we were heroes. When the number of customer complaints decreased, we all saw that as a good development, which would ultimately show up in sales and profits.

For some of our safety measures, good and bad weren’t all that clear. Say, for example, the times when the number of near-miss incidents was on the rise: did that mean we were headed for a big problem? We managers never could agree on the answer to that one. Half of us said, "watch out" and half of us said, "good news."

If we say that safety meeting attendance was falling, should we worry that we were about to have an accident? Everybody knew the relationship between customer complaint and sales, but we were never sure about the relationship between safety meetings and injuries.

In operations, if we didn’t have enough data to know what to do, we collected more data. For safety, we’d usually act on the data we had

When we had production or product quality problems, we were always quick to call in the experts. They knew how to dig through the data and find the cause of the problem. If the cause couldn’t be found, they’d go out and collect more data until they had the information they needed.

When it came to safety problems, it seemed like we never needed to call in the experts. Or collect more data. Or admit that the answer wasn’t obvious. We managers were always sure we knew what the problem was, and how to correct it.

Or so we thought.

In retrospect, we should have followed our approach of measuring product quality, customer satisfaction, and reliability. That would have made our lives as far simpler, and we probably would have gotten better results with less effort.

It’s one of the biggest mistakes we managers made.

Mistake Number 5: Trying to buy a game.

"This club is guaranteed to improve your score by 20 percent."

 -From a golf equipment informational

Sooner or later anyone who’s ever golfed has fallen to the temptation: buying the latest club to hit the market. The one guaranteed to knock strokes off next Saturday’s round.

Every once in a while, the latest technology works like magic. At least for a few rounds, and then we revert to form.

Most of the time, nothing really changes. Eventually the new club winds up in the back corner of the workshop, where it has plenty of good company with all the other clubs we bought to help us play better.

After all, lowering the score is the goal of every golfer, just as lowering the injury rate is the goal of every manager.

On a gorgeous autumn day a few years back, a famous golf teacher named Bob Toski put on a clinic for 60 of us in the maintenance and construction business. Along the way, he asked for a show of hands: "How many of you bought expensive new drivers or putters this year?" Every hand went up.

Then he asked, "How many of you invested in golf lessons?" One poor guy timidly raised his hand, perhaps embarrassed to admit he was actually taking lessons.

Toski glared at us: "There’s your problem: you think you can get better buying a game. It doesn’t work that way."

Toski was right about playing better golf–and right about improving safety performance.

As managers, we were always on the lookout for a quick and easy way to improve safety performance. We’d buy the carrot-and-stick approach: put in a safety incentive system, and simultaneously make an example out of the poor fellow who got hurt yesterday. We tried hiring safety inspectors and safety police. We re-wrote safety procedures; put in observation programs and employee safety committees.

Sometimes the methods worked. But more often, they didn’t work any better than that new golf club. Why was that?

Buying a safety game meant we managers didn’t have to change how we managed. We could just keep on swinging the way we always did, but with different results. Our new equipment would do the heavy lifting for us. Or so we thought.

It doesn’t work that way; not for golf and not for managing safety performance.

If we want better results, we have to change, and that requires us to invest in improvement. For golf, that means lessons from the pro, and hard time on the practice tee. It’s just that simple. You can’t send somebody out there to practice for you, and you can’t buy a lower score with your MasterCard.

When it comes to improving safety performance, it works exactly the same way. Getting people working safely is all about execution. Improving the way people in the organization perform their work every day–execution–requires leadership, and better leadership than what’s been employed in the past. We can’t expect better results with the same swing in golf or management.

The route to better leadership is the same as playing golf: "taking lessons from the pro and spending time on the practice tee." It’s just that simple.

Instead of buying a game, we’re investing in improvement.

More Safety Information

NIA Establishes Theodore H. Brodie Safety Award

If we had realized that years ago, we’d have likely seen far greater improvement in safety performance over the years. Sure, it would have taken a greater initial investment of our time and effort as managers. But, over the long haul it would have been a great investment.

Instead, we fell victim to trying to buy a game. It’s one of the biggest mistakes we made managing safety performance.

NIA Sites > Insulation Outlook Magazine > Global

Standards Issue

The ASTM Committee C16 on thermal insulation, met in Tampa, Fla., Oct. 20-22, 2003. The following is a C16 overview, scope, individual subcommittee scopes, and a summary of some of the activities by task groups reviewing and/or writing standards related to mechanical insulation. Readers can learn more about ASTM C16 by going to the ASTM Web site at: www.astm.org, clicking on "Technical Committee," then "Search for ASTM Committee by Designation," and finally select "C16" from the approximately 100 ASTM committees.

C16 Committee Overview

The ASTM Committee C16 on Thermal Insulation was formed in 1938. The committee meets twice a year, usually in April and October, with approximately 120 members attending over three days of technical meetings capped by a discussion on relevant topics in the thermal insulation industry. The committee, with current membership of approximately 350, has jurisdiction over 134 standards, published in the Annual Book of ASTM Standards, Volume 04.06. These standards continue to play a preeminent role in all aspects important to the thermal insulation industry, including products, systems, and associated coatings and coverings, excluding refractories.

C16 Committee Scope

The C16 Committee’s scope shall be the development of standards, promotion of knowledge, and stimulation of research pertaining to thermal insulation materials, products, systems, and associated coatings and coverings, but not including insulating refractories. These activities shall be coordinated with those of other ASTM committees and national and international organizations having similar interests.

C16 Subcommittee Scopes

C16.16 US Delegation to ISO/TC 163
Scope: Standardization in the field of thermal insulation including terminology, test methods, calculation methods and specifications for thermal insulation materials, components, constructions and systems, including a general review and coordination of work on thermal insulation within ISO. Excluded are: test and calculation methods that are treated by other ISO technical committees after agreement with these technical committees.

C16.20 Homogeneous Inorganic Thermal Insulation Materials
Scope: Develop and maintain standard test methods, definitions and nomenclature, recommended practices, classifications and specifications for all homogeneous inorganic thermal insulation materials under C16.00 jurisdiction except those assigned to subcommittee C16.21 and C16.23.

C16.21 Reflective Insulation
Scope: Develop and maintain product specifications and test methods applicable to thermal insulations that depend essentially on the reflectance of heat for their effectiveness. Test methods are those not generally applicable to other forms of thermal insulation or associated materials. Jurisdiction of this subcommittee on building-type constructions include only materials or assemblies consisting of one or more heat-reflective (low-emissivity) surface(s), such as metallic foil, unmounted or mounted on thin membrane(s), such as paper or fibrous or foam sheets, all less than 1/8" in thickness.

C16.22 Organic and Nonhomogeneous Inorganic Thermal Insulations
Scope: Develop and maintain standard test methods, definitions and nomenclature, recommended practices, classifications and specifications for all organic and non-homogeneous inorganic thermal insulation materials under C16.00 jurisdiction except those assigned to subcommittees C16.21 and C16.23.

C16.23 Blanket and Loose Fill Insulation
Scope: Develop and maintain product specifications; recommended practices and test methods (when not under the jurisdiction of a methods subcommittee) for all thermal insulation materials under C16.00 jurisdiction except those assigned to subcommittees C16.20, C16.21 and C16.22.

C16.24 Health and Safety Hazard Potentials
Scope: Develop and review standards related to potential health and safety aspects associated with the installation and use of thermal insulation materials, accessories and systems.

C16.30 Thermal Measurements (including calculation methods)
Scope: Develop and maintain test methods and recommended practices relating to the transfer of energy within and through thermal insulating materials and systems.

C16.31 Chemical and Physical Properties
Scope: To develop and maintain test methods and practices related to chemical and selected physical properties of thermal insulating materials.

C16.32 Mechanical Properties
Scope: Develop and maintain test methods and practices related to selected mechanical and physical properties of thermal insulation and associated materials.

C16.33 Insulation Finishes and Moisture
Scope: Develop and maintain material specifications, test methods, recommended practices and classification systems: (1) applicable to coatings, coverings, adhesives and sealants used in association with thermal insulations; and (2) involving the transfer of vapor through thermal insulation and associated materials, involving the accumulation of moisture in thermal insulating materials and systems.

C16.40 Insulation Systems
Scope: The development and maintenance of performance specifications and standard practices for thermal insulation systems. The systems include all of the individual components combined in a manner to provide an effective control of heat transfer and moisture transmission within the insulation systems under the operational and environmental conditions of its intended use. Such components, if part of the system, will include the thermal insulation, supports, securements, and protective coverings.

Summaries

The following are the summaries of recent activities in Tampa on individual standards. These are organized by the subcommittee associated with each standard:

Subcommittee C16.20 – Homogeneous and Inorganic Insulation Materials
  • C450 – Standards for Fabrication of Fitting Covers: the adjunct, which is published and sold separately from the C450 standard, is now available on CD. This contains new elbow specifications including a reduction in the number of miters.

  • C585 – Standard on Inner and Outer Diameters: There is continuing discussion at the task group on developing nesting standard dimensions and standards on outer diameters. Since the current standard is about to expire, the subcommittee decided to reballot it as is, with no changes, but to continue work at the next meeting.

  • C533 – Standard on Calcium Silicate Pipe and Block: There was a recent subcommittee ballot which received a persuasive negative regarding the need to distinguish between pipe and block insulation, particularly with regards to thermal performance. In addition, there is a new, higher-density calcium silicate material now available, with a density of 22 pcf that is being added to a revised draft. The standard will be reballoted.

  • C610 – Standard on Perlite Block and Pipe: There is similar activity as on C533 (see previous) regarding the need to distinguish between pipe and block thermal performance by type. As a result, a recent ballot received a persuasive negative and the standard will be reballoted.

  • C552 – Standard on Cellular Glass: The task group discussed cracking in cellular glass on applications above 250 degrees Fahrenheit (F) and whether there’s a need for double layering; the task group decided that there is no such need.

  • C547 – Standard on Mineral Fiber Pipe Insulation: The task group is planning a round robin sag test, in conjunction with the task group for C411 (hot surface performance of high temperature insulation). This round robin testing will also include tests for corrosivity, alkalinity, and pH, and mechanical properties, in particular compressive resistance.

  • C612 Standard on Mineral Fiber Board: A recent ballot received several negatives that were found to be persuasive. One of these was on the Scope, regarding use of mineral fiber board below ambient. The scope will be rewritten and will be reballoted as a separate item.

  • C195 – Standard on Mineral Fiber Thermal Insulating Cement: The task group has a new chairman and will work on receiving new data in order to make the standard current. Without this, there is some question as to whether the standard is necessary.

  • C795 – Standard on materials for Use over Austenitic Stainless Steel: The task group is in agreement over a change of acceptability standards to allow chloride ion concentrations below 10 ppm when sodium and silicate ion concentrations are above 50 ppm. This standard, with the appropriate change in wording, will be reballoted in the next few months.

Subcommittee C16.23 – Blanket and Loose Fill Materials

Task groups addressing this subcommittee’s material standards on mechanical insulation did not meet in Tampa but several do plan on meeting in Salt Lake City in April, 2004. These are C553 – Standard for Mineral Fiber Blanket Insulation; C1393 – Standard on Perpendicularly Oriented Mineral Fiber Roll and Sheet; C656 – Standard on Structural Insulating Board; and C929 – Standard on Handling Insulation over Austenitic Stainless Steel.

Subcommittee C16.22 – Organic and Nonhomogeneous Insulation Materials

The ASTM subcommittee C16.22 task groups discussed proposed new material standards on polypropylene foam and rigid polyimide foam as well as existing material standards. Recent activities on new and existing standards are as follows:

  • C534 – Standard on Flexible Elastomeric Insulation: The task group, along with the task group for C1427 – Standard for Polyolefin Foam Insulation, are sponsoring round robin testing for dimensional stability among several manufacturers.

  • C1126 – Standard for Phenolic Foam Insulation: The task group recently balloted a revised draft and received several negatives, some of which were found persuasive. Changes will be made and a new draft will be balloted.

  • C1410 – Standard for Melamine Foam Insulation: The task group recently balloted a draft and received some negatives that they found to be persuasive. The new revised draft, which will reflect the negatives, will include reference to a procedure for mounting samples for conducting E84 tests and will be reballoted.

  • C591-Unfaced Preformed Rigid Cellular Polyisocyanurate Thermal Insulation: There was discussion on the impact of pending blowing agent changes on the physical properties in the standard.

There is a task group writing a new standard for rigid polyimide foam (there is already a Standard for Flexible Polyimide Foam, C1482). This task group recently conducted a subcommittee ballot on a draft standard and received a number of negatives, several of which dealt with categories by density and were found to be persuasive. They will revise the draft standard and send it out for ballot. This is a task group writing a new standard for polypropylene foam insulation.

Subcommittee C16.30 – Thermal Measurements

The task group for C335, Standard Test Method for Steady-State Heat Transfer Properties of Horizontal Pipe Insulation, is in the process of incorporating vertical pipe insulation into the standard. Also, for use on below ambient pipe testing, it has been practice to test an ambient pipe with below ambient surroundings on the outside of the insulation. A new draft will include a cautionary statement regarding this practice, which can give incorrect results. The task group on C680, Practice for Estimate of the Heat Gain or Loss and the Surface temperatures of Insulated Flat, Cylindrical, and Spherical Systems by Use of Computer Programs, is in the process of adding new surface coefficients. This will bring C680 in line with the surface coefficients already incorporated in the program 3E Plus®, V3.2.

Subcommittee C16.31 – Chemical and Physical Properties

The ASTM subcommittee C16.31 activities that impact mechanical insulation involve Temperature/Stability, Corrosion, and Sampling. There are task groups that manage test methods for determining hot surface performance and linear shrinkage; and standard practices for estimating insulation’s maximum use temperature. Corrosion test methods include C692, the 28-day qualification test for insulation to be used on austenitic stainless steel related to civilian and military nuclear applications.

The associated test method for chemical analysis of leachable ions, C871 is used in the specifications for nuclear use and has been undergoing continuous review at ASTM meetings. A new task group is working on writing a new standard for estimating the corrosiveness of insulation towards other metals than stainless steel (carbon steel, aluminum, and copper). The status of that work is that a draft document has been balloted and is undergoing revisions. There is also a newly formed task group on statistical variables for reporting maximum physical properties (excluding thermal conductivity) that will have a significant impact on the testing of mechanical insulation.

Subcommittee C16.40 – Insulation Systems

This subcommittee has three major current activities. One is an active task group developing a new standard on fabrication of pipe and equipment insulation from cellular glass. In Tampa, this task group decided to limit its scope to taking the Annex from C552 and expanding it to become a separate, stand-alone standard. A second activity is reviewing existing standards on estimating quantities of insulation for piping and components (C1409). A third is reviewing an existing guide for selecting jacketing materials (C1423) and has decided to keep it as is. However, a member who is a specifier for an architectural/engineering firm said that he needs a specification, not a guide, to assist him in his work. Therefore, the task group decided to start writing a new specification, instead of revising the existing guide for selecting jacketing materials over thermal insulation. This will eventually become a new standard.

Subcommittee C16.94 – Terminology

This subcommittee only has one standard to address, C168, which contains a number of insulation term definitions. In the last year, ASTM C16 has approved definitions for the terms mineral wool, fibrous glass, and glass fiber. In the next half year, the task group recommended adding definitions for the following five terms: polyimide foam, homogeneous material, flexible cellular, open cell, and closed cell. All are currently defined in existing ASTM standards except for homogeneous material which is already defined in C168.

Subcommittee C16.96 – Technology Transfer

This subcommittee organizes the Monday Night Forum, which was held in Tampa on the evening of Oct. 20. The topic was the new American Society of Heating and Refrigeration Engineers (ASHRAE) Mechanical Insulation Technical Committee and its work in writing a new chapter for the ASHRAE Handbook of Fundamentals. This chapter will be called Insulation for Mechanical Systems. There were four speakers on the subject. Scott Miller of Knauf Insulation first gave an overview of ASHRAE, the technical committees, and the handbooks. Glenn Brower, also with Knauf, then spoke on the history and background of this effort to develop a new chapter for the handbook. The third speaker was Chris Crall of Owens Corning, who spoke on the content of the new chapter, which will include both performance properties of specific types of mechanical insulation and specific design information. Finally, Andre Desjarlais of Oak Ridge National Laboratory spoke about ASHRAE research programs and how research projects are initiated, funded, approved, and tracked.
As an additional note of interest to the insulation industry, ASHRAE is planning a symposium in January, 2005, in Orlando, Fla., on the subject of mechanical insulation. ASHRAE will soon be calling for papers for that Symposium. Its Web address is www.ashrae.org.

For the next ASTM C16 meeting at the Little America Hotel in Salt Lake City, the forum subcommittee is planning on a Monday Night Forum on April 19 on the topic of "Using Insulation for Noise Control."

Acknowledgements

The author wishes to thank the following people for their contributions to this article:

  • Bill Brayman, Brayman Insulation Consultants, LLC
  • Kartik Patel, Armacell, LLC
  • Ken Wharlow, Tutco
  • John Mumaw, Owens Corning
NIA Sites > Insulation Outlook Magazine > Global

Developing Software for Energy Management

Benefits of an Energy Management Tool

A well-designed energy management program should:

  • Identify energy losses of bare sections of piping or equipment, or damage to insulated systems where energy efficiency is questionable.

  • Identify greenhouse gas reductions.

  • Provide payback period for repairs required.

  • Be capable of prioritizing repairs to insulation in place as part of a maintenance program.

  • Be capable of identifying, based on the existing condition of the insulation, the cycle frequency for re-audit.

  • Be capable of providing additional information relative to the "big picture."

Having been employed over many years in the petrochemical industry and directly involved with software systems that were developed for the maintenance management of industrial facilities, I have seen these software systems evolve from archaic, cumbersome systems that were meant to be used only by devoted personnel, to today’s software systems that were developed to be used even by individuals with limited computer experience. Today, these state-of-the-art software systems empower us with the latest technology to develop user-friendly programs for conducting energy management audits.

I would like to share with you my own personal experiences in developing the Maintenance Audit Program (MAP) for conducting insulation and energy management audits.

Facility Owners Want to See the "Big Picture"

In the past, the main objective of preventative maintenance systems was to identify, prioritize, and calculate the cost of related repairs to ensure the safety and long-term operation and reliability of facility equipment. With the increasing costs of energy and the emphasis being placed on energy savings and the reduction of greenhouse gas emissions to protect our environment, the need for software programs to assist in energy management has taken on an increasing role in the way business is conducted. However, although energy management is a key element, facility owners still want to see the "big picture" in determining the reliability of the engineered systems on their equipment. An energy management software program should incorporate a "complete systems" thinking approach. Although an insulation system provides an immediate reduction in energy usage and greenhouse gas emissions, one must also consider additional aspects related to the condition of the equipment.

Evaluate the Total Engineered System

In developing the software program for energy management and in consultation with industry, many different considerations needed to be addressed. In addition to evaluating the insulation system on equipment, facility owners also required a program that would evaluate the total engineered system of their equipment. For example, the condition of the coating system under the insulation, the condition of the heat tracing system and the condition of the fireproofing system. An energy management program shouldn’t only be based on a systems maintenance approach to repair of equipment, but must further incorporate an engineering systems approach.

Industry Code Tables

An energy management program should incorporate a "fact-based" system of measurement. These tables of codes act as an unbiased guideline for determining the condition of the engineered system for prioritizing the repairs.

Thermal Insulation Codes

In order to provide a consistent means of evaluating piping and equipment within the facility, a set of insulation codes was developed to provide the certified energy appraiser with a means of prioritizing the repair requirements of equipment. The program also incorporates additional references to codes for determining the potential degree of failure to the insulation system on the equipment, while prioritizing the repair work.

To accomplish a complete engineered systems audit, discipline codes were established using the respective industry guidelines. These codes are also used to determine the audit cycle frequency. Audit cycles are necessary to measure the repairs and provide the facility owner with a true maintenance program for management of his piping and equipment.

Service Codes

Secondly, code tables should include a reference to service codes. Service codes are used to reference the type of engineered insulation system to be used to complete the repairs required.

Reason Codes

Finally, a reference to reason codes is required to identify the reason for the thermal insulation code used to prioritize the work. For instance, is the insulation required for freeze protection, personnel protection, and corrosion under insulation or for energy conservation to ensure the long-term thermal efficiency of the system?

As you are aware, a situation where a hot bare pipe surface is missing insulation would immediately indicate an increase in energy costs, or where insulation is completely saturated would also indicate an increase in energy costs, but could also indicate the potential for corrosion under insulation. So, as a certified energy appraiser, one must not only concern oneself with energy management, but should also be looking at the "big picture."

Equipment Codes

Equipment Cross Referencing

To assist in the auditing processes, the certified appraiser should ask the facility owner if an equipment identification system is used within the facility. This system of identification simplifies the means of identifying a piece of equipment in the field. Typically, the industry will label piping and equipment using an abbreviated form of identification; for example, exchangers could be identified as EX-112. By using this form of identification, the certified energy appraiser can then run a report by equipment groupings, thus narrowing down his search for equipment. Equipment abbreviations are commonly used in the industry as a means of equipment identification.

Plot Plans, P&ID’s and Line Lists

The use of facility Plan Layout Drawings (Plot Plans), Process and Instrumentation Flow Diagrams (P&ID’s), Equipment Line lists and/or isometric drawings, are imperative documents for conducting a thorough energy audit of a facility. The documentation is required to gather the detailed information required for entry into the energy management program.

Plan Layouts

Plot Plans can be used to sub-divide the facility into workable areas for the purpose of identifying the detailed location of a piece of equipment within the facility.

It’s essential that the certified energy appraiser work with the facility representative in setting apart the individual operating areas. Each area should then be identified by its own unique name (i.e., steam plant) as defined by the facility owner. A software program should be designed with the capabilities of separating the equipment by operating area.

Process and Instrumentation Flow Diagrams

The use of P&ID’s is essential in identifying equipment in the field. P&ID’s also provide line number identification of piping, the flow of the process and additional information relative to the piping and equipment. For instance, the size of the piping, the service of the piping (i.e., steam, condensate, etc.), design temperature, operating temperature, heat tracing medium, insulation thickness and insulation type.

Line Lists

The use of line lists can assist the certified energy appraiser in quickly identifying the piping circuit and equipment connections, linking a specific section of piping to other piping and, finally, to the equipment.

Pre-Job Meeting

Prior to beginning the audit, a meeting must be scheduled with all parties who have a vested interest in the energy audit. A total detailed scope of the work should be discussed to determine the client’s specific needs and requirements. The first step is to obtain a plot plan of the facility and sub-divide the facility into workable areas. Secondly, request from the facility owner the necessary information about the current use of energy for input into the 3E Plus® version 3.2 program (an insulation thickness computer program developed by the Insulation Manufacturers Association). This information can also be obtained from the energy provider if it’s not available from the facility. Once the pre-job meeting has been completed and the facility has been divided into workable areas, the appraiser is now armed with the necessary information required to conduct an in-depth audit of the facility. Most importantly, prior to setting foot on a client’s property, understand completely all the rules and regulations of the facility and that the necessary personal protective equipment (PPE) is worn while on the site.

Equipment Detail Information

Data Collection

The energy management program uses a data collection sheet to gather consistent information pertaining to the equipment. Specific information is documented, such as equipment identification numbers, the operating area in which the equipment is located, the detailed location of the equipment within the operating area, the equipment group, the type material of which the equipment is constructed (i.e., carbons steel, stainless, etc.), the state of the equipment, the design temperature, the operating temperature and a detailed description of the equipment. The operating temperature can be determined by the use of a surface temperature gauge, or infrared thermography if not identified on the documentation provided by the client.

Next, examine the entire insulation system to determine the degree of failure and document findings in detail, providing a thorough description and recommendation for repair. If a shutdown of the equipment is required to complete the entire repair required, the energy management program is equipped with this function. It’s important to be as accurate as possible as someone else will need to find the equipment and complete the scope of repairs mentioned in the report without assistance. This also goes for the contractor; the client may choose to give the report to the local contractor to complete the repairs and requires enough detail so they can also find the equipment without assistance and complete the repairs based on the report.

Insulation Priorities

Document the date and the name of the certified energy appraiser who performed the audit. Prioritize the condition of the insulation system using the insulation code table. The priority classification is also used to determine the audit cycle. Reference to the service code for repair and reason code are then documented.

Estimating

A thorough energy audit should include a cost estimate of repair. The certified energy appraiser should make it quite clear to the client with a written disclaimer that the cost estimate is given for rough budgeting purposes only and for determining the payback period. The estimate should not be used for comparison of accuracy when requesting quotations from a contractor. For this reason, if the certified energy appraiser is not experienced in providing cost estimates, it’s recommended he request the assistance of a professional within that field of expertise. As mentioned earlier in this article, the facility owner is most often concerned with the "big picture" of the equipment and may request additional information pertinent to the equipment such as the condition of the substrate of the equipment, the coating system, the tracing system, the fireproofing system, or as may be indicative in older facilities, the presence of asbestos. For this purpose the energy management program incorporates the use of other industry codes and reporting features to provide a thorough investigative analysis.

Reporting

Energy Analysis Summary

Once all information has been gathered, the energy management program incorporates the use of 3E Plus for determining energy losses, heat gain and greenhouse gas emissions. Estimated costs of repair used in the energy management program are then calculated to determine the payback period for the insulation repairs. This complete system of measurement provides the facility owner with a direct roadmap to realizing the energy savings available through proper insulation maintenance of the equipment.

Other Reporting Features

Now that the facility owner has the information necessary to make an informed decision regarding the type of energy costs he can recuperate by implementing insulation repairs that provide an immediate reduction in energy use and greenhouse gas emissions, he may now require additional assistance in determining which equipment should be worked on first based on his existing maintenance budget and long-term maintenance projections. Having explored different types of reporting features and in consultation with industry, the energy management program provides several different variations in reporting. Incorporated into the program as additional reporting features to assist the facility owner in determining his insulation requirements are the following reporting capabilities.

1. Summary reports that can provide a prioritized list of equipment repairs.

2. Detailed reports that identify the full scope of repairs to the equipment by priority.

3. Summary reports identifying the cost of repair for each piece of equipment.

4. A separate column within the summary report to identify the cost of access to the equipment to complete the repairs (i.e., scaffolding, manlift, etc).

5. A summary report identifying the overall facility cost of repairs by area and priority for the purpose of long-term planning strategies?

Incentive Programs

A high quality energy management program, together with other incentive energy management programs offered by select energy providers and federal agencies (dependent on you location in North America) will provide the tools needed by the certified energy appraiser in providing the client with a cost effective incentive program for auditing insulation to determine his current and future energy usage.

Editor’s note: Publication of this article on the MAP program does not necessarily signify NIA’s endorsement of the program over other energy management software tools. This article is designed for informative purposes.

NIA Sites > Insulation Outlook Magazine > Global

Choosing the Right Insulation System

There are many types of insulation available, making it incredibly difficult to choose. There are fibrous, cellular and granular insulation materials with so many specific materials in each of those categories that it is nearly impossible to count them all. There are weather barriers galore; smooth, embossed, corrugated and a multitude of coated aluminum jacket materials. There are also stainless, PVC, and a vast array of trowel-on, brush-on and roll-on materials. How does one figure it all out?

What method do you use at your facility?

  • Do you use what you used last time?
  • Do you ask the insulation maintenance crew?
  • Do you decide what to use based on temperature? Price?

If you have used or are currently using a method that sounds or looks similar to what is mentioned above you may have obtained an energy-efficient, long-lasting, well-performing system. However, considering all the insulation materials to pick from, combined with all the environments to which insulation may be subjected, the odds do not look very good.

The proper selection of an insulation system is not "one-stop shopping." The solution lies in a word used several times already: "System." Determining an insulation system is a little like a jigsaw puzzle; as each piece must fit properly with its partner or the whole puzzle falls apart. If we take a systematic approach, we think in a scientific, organized way, considering all elements that could affect the performance of that insulation system. This way can you be assured you get the insulation system that is correct for the specific circumstances. Simply put, you should consider:

  • WHAT is being insulated
  • WHY it is being insulated
  • WHERE it will operate
  • HOW much money it costs and will save.

This will help you ask the right questions so you get the "complete picture" of what you are asking the insulation system do plus how, where and why it will be working. Understanding the questions to ask is the first and often most important step to selecting the most appropriate insulation system.

What?

The first thing to consider is what is going to be insulated. Is it piping, tubing, vessels or equipment? Since many insulation materials can be specific to the type of surface being insulated, it is the logical place to start your "system-thinking." Also, understand materials of construction. Is it carbon steel, stainless steel, plastics, alloys, etc.? This not only affects how the insulation system performs but gives you direction as to whether or not you need to consider additional protection for the insulating surface for corrosion protection, etc.

Why?

The next thing to consider is why it’s being insulated. There are several reasons for insulating a surface:

  • Process Control
  • Energy Management
  • Freeze Protection
  • Personnel Protection.

Why is this so important? If the sole reason for insulating the surface is to provide personnel protection or freeze protection, then the insulation thickness would likely be much less than if your reason for insulating is energy management. An example is shown in Table 1 for a 10" pipe in 400 degree Fahrenheit (F) service.

Where?

Now is the time to consider the environment in which the insulation system will operate. Yes, there is a lot to consider, but it isn’t as difficult as it first appears. These aspects can be grouped into four categories.

  • Operating Temperature (steady state, cycling, extremes, etc.)
  • Ambient conditions (temperature, relative humidity)
  • Physical environment (chemical exposure or spillage, abuse potential, etc.)
  • Special Conditions

Operating Temperature

First, what will be the operating temperature of the insulating surface? Be careful and thoughtful here ? do not just think about normal operating temperatures, consider if the system will cycle in temperature or will it have occasional highs or lows.

One chemical facility forgot this possibility. A pipeline operating at minus 40 degrees F was insulated with polyisocyanurate insulation along with an appropriate vapor retarder and weather barrier. However, what it overlooked was the fact that once a year during the planned shutdown, this pipe line is purged for 1-2 days with hot inert gas at 400 degrees F. What happened? The polyisocyanurate insulation was unable to tolerate temperatures this high and it disintegrated. The result was 400 to 600 feet of insulated line that had to be stripped and reinsulated.

Another thought ? is the insulating surface being heat traced or jacketed? If so, you need to make sure the insulation material is rated for the heat the tracing will deliver. Also, you need to note it in the specifications so the party responsible for purchasing and/or installing the insulation system knows exactly what material to purchase. It is frustrating (and probably expensive for you) to an insulation installer to purchase 4"x2" thick insulation material preformed to fit on a 4" schedule 40 carbon steel pipe, only to find it is steam traced and would have required 4.5"x 2" thick insulation!

Ambient Conditions

Next, determine the ambient conditions under which the insulation system will operate. You need to determine the ambient temperature, relative humidity (RH) (if you are trying to design for condensation control), wind speed and sometimes the amount of rainfall. Again, just like understanding operating temperature, think about possible extremes. Designing an insulation system for condensation control at 50 percent is going to fail if the environment occasionally sees 90 percent RH.

Physical Environment

You need to consider and allow for the physical environment so the insulation system will be able to give you good performance over a long time. An insulation designed for its physical environment, properly installed and maintained can easily last 15-25 years and more.

Will the insulation system be located inside or outdoors? Inside locations are not susceptible to high wind and UV rays so weather barriers may not need to be as resilient as in outside service. Also, rain and water exposure is often reduced so, again, weather barriers may not need to be as durable. Be cautious here. Water is insulation’s greatest enemy and comes from a multitude of sources besides the sky. Will the area be washed down or does it contain "deluge" type sprinkler systems that are annually activated for testing? If so, plan on getting as much or more water spray exposure as being located outside.

What is the chemical environment? Will the insulation system be subjected to acids or caustics, splashes or fumes? If so, untreated aluminum jacket materials may not perform well, as they are susceptible to these chemicals. Is the location close to an ocean coast where salt contamination is likely? Protection from its corrosive effects will need to be considered. Will there be flammable or reactive products that could come into contact with the insulation materials through leaks, fumes or splashes? If so, insulation materials that resist absorption may be more appropriate.

What is the potential for vibration? High vibration can cause some rigid insulation materials to deteriorate; a softer, more resilient material may be better. What kind of physical abuse will the insulation system see? Is it close to vehicle traffic or will personnel stand on, crawl over, or have reason to strike the insulation system? More rigid insulation material offers more structural support and often a better long-term performance.

Special Conditions

The final "Where" to consider is the "mixed bag" of special considerations. Will this insulation system or a specific section(s) of the insulation system be subject to routine and periodic maintenance activity? If so, then installing an insulation system specifically designed for removal and replacement may be a better selection than a permanent system that would have to be repeatedly repaired or replaced after each maintenance job.

Does the insulation system have to conform to any specific regulation or requirement such as FDA or USDA requirements? Does the fire code or your insurance regulations limit any materials that may contribute "fuel load" or "flame spread" to the area the insulation will be located?

How?

The final question is, how much do you want to spend? Now this is likely to sound like the most useless question and asked at the most inappropriate time. You want the most inexpensive system that will properly do the job for you and shouldn’t cost be the first thing considered? Well, simply put, if you consider cost first, you run a great risk of initially eliminating insulation systems or individual components of that system that appear expensive but would actually be the most cost effective if other information was considered prior to what it may cost.

Here are two examples why considering cost first is not the best approach.

I was performing an insulation assessment a few years ago for a Midwestern chemical manufacturer. During the assessment I discovered that the facility’s insulation maintenance crew was using all "field" fabricated insulation fittings and in several locations, "field" fabricated fitting covers (Picture 1 & 2). When I asked the site owner why this was being done, they informed me they had considered the cost of preformed insulation fitting and fitting covers and found them to be "considerably" more expensive than the straight stock being used to fabricate the fittings. They had also "confirmed this with the insulation crew." I informed them that custom fabricated insulation fittings and their covers are often necessary and cost effective due to a variety of reasons but their situation fit NONE of those. I showed them that the insulation materials are the smaller percentage of the total installed cost and their decision was actually costing them money and potentially increasing the possibility of moisture damage in later years due to the high number of seams that can be damaged and let water into the system.

In another case, at a Gulf Coast chemical manufacturer, a ground level pipe rack had been insulated with a fibrous insulation and an aluminum jacket weather barrier. According to interviews with the owner, this type of fibrous insulation had been chosen because:

  • the material was considered to be "reasonably priced"
  • it was considered to be "straightforward" to install
  • it satisfied the operating temperature of the product within the piping

These points were emphatically mentioned in just this order, suggesting strongly what was most important to their decision. The owner was correct in everything they thought about, but overlooked some important items.

  • This pipe rack was in an area that routinely had a high traffic and maintenance activity.
  • Although there were stairs and bridges across this pipe rack, personnel routinely took short cuts by climbing directly over the piping.

Because this particular type of fibrous insulation provided minimal structural support for the aluminum jacketing, the result was badly damaged insulation jacketing that no longer provided a weather barrier to water penetration. This severely reduced some of the insulation system’s performance. Because of the Gulf Coast location, this plant ONLY suffered energy cost loss instead of the additional problems of freeze up, process control, or corrosion problems. However, the energy cost loss was more in one year than the insulation system cost.

In both of these examples, an insulation system was chosen with cost considerations being first on their lists. The result was good materials used in a manner that didn’t get optimum results.

The final cost consideration is the question of, how long do you want the system to perform? Will the facility operate well into the foreseeable future, or do you intend to run it two more years until a new unit is started up, and then shut this unit down. These are two very different operating circumstances. In the first case you would want to consider an insulation system that had a good chance of performing well for a long time (10-15 years). In the second case, spending the extra money to insure a good long term performance is likely to just waste money.

Summary

By thinking of insulation and its operating environment as a complete system instead of a bunch of unrelated parts and you have asked and gotten answers to the what, why, where and how questions, you have the necessary information you need to make an informed decision on an insulation system that will do the job intended, last a long time and be cost effective.

For additional help in selecting an insulation system the National Insulation Association has published an "Insulation Materials Specification Guide" and a "Criteria for Choosing Insulation" is available by contacting the NIA at:

National Insulation Association
99 Canal Center Plaza #222
Alexandria, VA 22314
(703) 683-6422
www.insulation.org

The what, why, where and how questions I have discussed in this article are also available in a questionnaire format to help you in your insulation system selection and can be downloaded below.

DOWNLOAD INSULATION CHOICE SELECTOR