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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.

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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

NIA Sites > Insulation Outlook Magazine > Global

High-Temp Textiles

The development of high-temperature textiles has come a long way in the past 30 to 40 years. Prior to this, asbestos was the primary fiber material specified to make textiles for high-temperature fireproofing and insulation applications throughout the world. Asbestos is a naturally occurring fiber that has been mined and processed since 4000 B.C., when it was used as wicks for lamps. In 1724, Benjamin Franklin purchased a fireproof purse made from asbestos that is now at the Natural History Museum in Washington D.C. In "The Wizard of Oz," the Wicked Witch of the West appeared on a broom made of asbestos. Asbestos has most of the desirable properties needed to make great high-temperature textiles. Government and industry engineers specified asbestos in most of the high-temperature fireproofing, insulation and gasket applications. Into the late 1990s, the solid fuel boosters of the space shuttle were still insulated with asbestos.

Today, many countries continue to use refined asbestos as their "primary" fiber for fireproofing and making high-temperature textiles. However, during the early 1970s, in Western countries, general health concerns and problems about asbestos, Asbestosis and asbestos-related liabilities have all but eliminated its use in the United States, Western Europe and a few other countries.

Now, there are many other choices of man-made base fibers to choose from that are much safer to use than asbestos. These include fiberglass, high purity silica, quartz, ceramic, basalt, carbon, aramid, stainless steel and blends or composites of two or more of these materials. These are then made into yarn, thread, fabric, rope, tubing and felts with various coatings and colors in different weights, thicknesses, densities and yields. Using these textile combinations, talented fabricators apply these textiles to make a whole host of flexible insulation products for almost any high-temperature application.

Indispensable Applications

Applications for high-temperature insulation textiles have become indispensable in most industries around the world. What follows are just a few examples.

Flexible removable/reusable insulation blankets have been around since before World War II, primarily used on Navy, Coast Guard and commercial marine vessels to insulate hot piping, engine compartments and exhaust systems. The industrial sector in the United States geared up their use of removable/reusable insulation in the late 1970s, when the Organization of the Petroleum Exporting Countries (OPEC) decided to embargo oil to the United States, and the cost of energy went from $0.50/mmBTU to $5/mmBTU. Until that time, most industrial facilities didn’t insulate high-maintenance pipes, valves, fittings and equipment unless it was critical to process control or quality. Today, non-insulated high-maintenance equipment that operates at 300 degrees Fahrenheit (F) will yield a payback on investment of about a year if insulated. At 500 degrees F and above, this payback becomes a few months or if insulated with flexible removable/reusable insulation. New materials and fabrication techniques allow flexible removable/reusable insulation blankets to be reused many times in applications as high as 1,400 degrees F and having vibration that would shake any other form of insulation apart.

Today we have high-temperature textiles that will handle very high levels acidity and alkalinity in insulation applications. New and better high-temperature textile materials are also available for making soundproofing or noise abatement blankets. Flexible removable/reusable insulation blankets are just one of the important applications of high-temperature textiles.

High-temperature knitted or braided tubing made from aramids, fiberglass, amorphous silica, carbon and other exotic materials are used to insulate electrical wire or hydraulic and pneumatic hoses from hot sources. Insulated wire, piping and hoses are normally part of all process equipment and are critical to the successful operation of the systems. These are the products that link most of the equipment controls used by all industries. If the system needs to be fireproofed or shielded from elevated temperatures, high temperature insulation textiles are normally used.

Personnel Protection

Manufacturing and construction companies use high-temperature textiles as curtains and blankets to protect or insulate people and equipment from welding, grinding or cutting touch sparks, spatter and slag. During maintenance shut downs or turnarounds, industrial plants will section off areas as "Hot" with high-temperature textiles used as barricades, curtains and blankets to help ensure worker safety. Most commercial kitchens have a fire blanket hanging on the wall or nearby in the case of a grease fire. Many movie and stage theaters use high-temperature textiles as curtains in case of fire. As the awareness for safety becomes a larger influence in our lives, high temperature, non-flammable textiles for curtains and blankets will find more applications.

High-temperature textile clothing protects our firefighters, racecar drivers, astronauts, plant and mill workers in some of the hottest, toughest environments on earth. Specialty man-made fibers such as Nomex®* or other aramids and fiberglass blends now dominate the construction and plant worker market. Space suits are made of high temperature quartz and carbon materials. Currently, companies are diligently working to find high-temperature textile solutions for saving firefighters and property from the many wildfires found in the western parts of the United States. Leather, fiberglass, silica, carbon and aramids fabrics and felts are used together and separately to make gloves, aprons, shirts, pants, chaps and other protective clothing for workers in high temperature environments. Safety and comfort are the benefits driving this market.

The automotive industry uses high temperature textiles for insulating engine compartments and exhaust systems in most of the automobiles that we all drive. In higher power output motors, the turbo chargers and exhaust systems can exceed 1,400 degrees F. Thus, it becomes increasingly necessary to insulate the engine compartments and exhaust systems of commercial vehicles such as 18-wheelers and large horsepower tractors, combines and heavy construction equipment. One landfill company needed to insulate its exhaust systems on its large combines because of fires being started at the landfill from its hot exhaust systems. Racecars of all types use high temperature insulation textiles as a lightweight, durable insulation to keep the drivers as comfortable as possible while on the track.

The aerospace industry uses high-temperature insulation textiles all over most space, commercial and private aircraft. Space shuttles use special high-temperature insulation blankets in the cargo bay to protect valuable loads during liftoff and re-entry. Strong, high-temperature carbon fiber fabric is used to make the composite materials for the shuttles. Most pressurized aircraft use hot bleed air from the engines to air condition, heat and drive many of the aircraft systems. Lightweight, high-temperature textiles play a large role in insulating the bleed air systems, along with baffling and insulating ducting, hoses, wiring, engine compartments and exhaust systems on aircraft.

Metal industries use high-temperature insulation textiles for a considerable number of applications. High-temperature textiles are made into curtains and blankets to shield workers and heat sensitive equipment from the radiant heat and splashing of molten metals. High-temperature textiles are also used to help maintain slow, controlled cooling in the heat treating and annealing process.

Steam Applications

Power plants use high-temperature textiles throughout most of their facilities. Most of the steam and condensate system will use removable/reusable insulation blankets on the high-maintenance pipes, valves, fittings and equipment. The steam turbines get special high-temperature blankets to keep condensate from forming in the turbine section. Natural-gas-fired turbines will get blankets on the turbines and exhaust systems.

The food processing industry uses high temperature textiles to insulate their ovens and steam system. High-temperature PTFE/Teflon coated or laminated fiberglass fabrics are applied to make most of the conveyor belts used when making your favorite processed foods. Special PTFE/Teflon impregnated, high temperature textiles are used as chemical splash shield in the food processing industry to protect people and food.

The pulp and paper industry uses high-temperature textiles through out their processes. PTFE impregnated fiberglass fabrics are used in the pulp digesting areas as chemical splash shields and in flue duct expansion joints because of their high temperature and hostile chemical resistant properties. Large boiler houses generate vast amounts of steam, which is used throughout the paper making process to dry the paper, help digest wood chips in pulp and to generate electrical power for utilities. Where there is steam, there should be many applications for removable/reusable insulation and gaskets made from high temperature textiles.

High-temperature insulation textiles have worked to insulate some of the toughest and most diverse applications that man has made for himself. The challenge for the future is to keep developing new and better high temperature, chemical resistant materials from which we can make better high temperature textile fiber, yarns, fabrics, ropes, tubing, felts, films and coatings.

NIA Sites > Insulation Outlook Magazine > Global

Foam/Fiber Refractory Insulation

Mineral fiber boards and blankets have been the traditional solution for insulation repairs in the power industry. However, newer refractory and insulating technologies have produced a number of innovations, including a gunnable foam/fiber refractory insulation that significantly speeds up the repair of industrial linings, reduces downtime, and cuts down on overall costs. Traditional insulating techniques generally involve the cutting and fitting of boards and blankets often requiring five or more installers. This new gunning technology requires only a three-person installation crew, and an equipment cost of $35,000. The manufacturer has negotiated a worldwide license for this technology for the refractory market, and licenses and trains the installers to install this material.

Trigen-Boston Site of Field Trial

The new foam/fiber system was recently used by the refractors division of Atlantic Contracting " Specialties, Westwood, Mass., and applied to the exterior of a power boiler at Trigen-Boston Energy Corporation, Boston. The product is a refractory ceramic fiber (RCF) combined with an inorganic binder (colloidal silica) and an organic foaming agent in the field.

Company Services 235 Customers

Trigen-Boston provides steam service to about 235 customers in downtown Boston through 22 miles of underground distribution piping. The steam is used for heating, process use and approximately 42,000 tons of cooling. The thermal energy is supplied to the system from two facilities with total steam generating capacity of 1.6 million pounds per hour. The boilers are fueled by natural gas, No. 6 fuel oil and No. 2 fuel oil.

System Applied to Exterior of Power Boiler

An installation crew applied a 3 to 4 inch foam/fiber refractory insulation system over the exterior of a power boiler with an operating temperature of 1,800 degrees Fahrenheit (F). The boiler was an old 1930s design constructed of cast iron Bailey Blocks. The Bailey Blocks served to secure the steam tubes in place, but were a constant source of heat loss. Also, the design of the boiler lent itself to air leaks and subsequent burner control/boiler pressure problems.

Easy Flow System

The installation process combined the bulk fiber material with the binders in a patented mixing mechanism creating a homogeneous foam/fiber mixture. Installation machinery propelled the mixture through a feed hose and nozzle, and the material was then gunned onto the target surface. Because of the irregular geometry of the unit, no anchors were used. The foam/fiber refractory insulation system flowed easily to fill the cavities.

In addition, the insulation system was gunned directly onto the boiler tubes and Bailey Blocks. After the installation was completed, a low density foam/fiber mixture was applied and the exposed surface was troweled smooth. Corrugated aluminum jacketing was then placed over the exterior of the foam/fiber refractory insulation system. Once the product sees temperature, it fully dries and corrosion is typically not an issue.

System Has Exceeded Expectations

According to Chuck Murphy, project manager for Trigen-Boston Energy, "The foam/fiber refractory insulation system allowed us to upgrade our boiler without a lengthy outage and significant loss of steam production. Because of the fast installation speed of this system, we are able to retrofit large sections of our boilers during scheduled outages."

Murphy also said, "The monolithic nature of the insulation system greatly reduced air infiltration into the boiler. Because of the reduced air infiltration, the internal gunnite refractory of the boiler is in considerably better condition in the areas where the foam/fiber refractory insulation system was installed. The new system will be the key component in our upgrade initiative for all our boilers."

Figure 1

Traditional blanket insulation is time-consuming to install and does not effectively seal against the cast-iron supports (Bailey Blocks) and steam tubes

Figure 2

The boiler wall consists of a series of boiler tubes and internal and external Bailey Blocks

Figure 3

The foam/fiber insulation will conform to the irregular surface of the Bailey Blocks and steam tubes to provide an efficient insulation system

Figure 4

The exposed surface of the foam/fiber insulation is troweled smooth, completely covering the Bailey Blocks and steam tubes, sealing the boiler

NIA Sites > Insulation Outlook Magazine > Global

Auditing for Efficiency

An energy audit can mean many things to many different people. For some, an energy audit (sometimes referred to as an energy assessment) means focusing on processes (steam traps), operations (lights and computers), or equipment (motors). These areas are all worthwhile and offer companies an opportunity to save energy as it relates to steam, heat, or electrical output. Energy savings can also be applied to lowering the amount of energy required to make electric power.

President George W. Bush said, "Energy is a problem that requires action; not politics, not excuses, but action." Obviously, the action to which Bush referred should be applied to industries that use the most energy, the steam and power-generating industries. This energy is fuel (oil, gas, coal, refuse) and is used to make electricity. Brick, refractory, and insulation on any steam-generating unit when properly designed and installed will save as much as 5 percent to 7 percent percent in annual fuel cost. Therefore, brick, refractory, and insulation have a direct effect on the energy consumption of a steam-generating boiler.

Example of Potential Savings

The Lawrence Berkley National Lab recently reported the estimated the life-cycle cost of a typical industrial boiler unit. It was discovered that, with a $165,000 capital cost and 20-year life, operating 7,000 hours per year, the typical industrial boiler unit uses $8 million dollars of fuel (oil, gas, coal, refuse) over its lifetime.

Based on our estimates of 5 percent, the energy savings would amount to approximately $500,000 over the life of the boiler, assuming, of course, that its brick, refractory, and insulation were properly designed and installed. Brick, refractory, and insulation are key components of any steam-generating boiler, and when properly designed and installed can last 20 years or more.

The boiler used as an example of fuel consumption by Lawrence Berkley National Lab is quite small, yet the premise for energy savings can apply to any steam-generating boiler, regardless of size. For example, a new hopper bottom boiler that was recently built in St. Paul, Minn., has a furnace box size of 25 ft x 24 ft x 79 ft and a capital cost of more than 4 million dollars. The brick and refractory for that particular industrial boiler was estimated to cost $130,000. The amount of fuel it will consume over a 20-year life would be far greater than the small package boiler that Lawrence Berkley was talking about and so too would be their energy savings. (The exact numbers and fuel cost were not available as the unit is too new.)

Unfortunately, most people don’t pay attention to their brick, refractory, and insulation. For example, when brick and refractory fail, you can expect many costly problems. Fly ash fills the penthouse and vestibules, hot spots begin to show up on the cased wall areas, fuel consumption rises, and, in some cases, the boiler will have to be shut down.

In this article, we will provide an example of an energy audit at a very large power-generating facility.

Background Information

The energy audit was performed on a 550-megawatt steam-generating boiler built in 1961 that was designed to be a combination tangential boiler* (on the furnace roof) and a membrane boiler*. It has 60 XCL-type burners, uses pulverized coal as its fuel and has a furnace box size of 32 ft x 72 ft x 128 ft. Prior to this energy audit, fly ash had to be removed from inside the entire penthouse* and wind box* areas because it had completely filled these two areas. (See box at top left of page 9.)

The Energy Audit

The energy audit’s objective was to review and assess the condition of the brick and refractory materials in all areas of this large steam-generating boiler. In addition, comments were needed on the condition of the insulation used on the gas turbine and super heater tube legs and headers inside the penthouse.

To do that, it was necessary to:

  • Review all the drawings (boiler settings, super heaters, burners, doors, wall boxes, roof tube arrangements, boiler and furnace wall tube arrangements) where the brick and refractory materials were to be found on this boiler. This amounted to looking at almost 100 original and alteration-type construction and detail drawings.

  • Do a complete review of the brick, refractory, and insulation specifications (material and labor) of the boiler. The original equipment manufacturer (OEM) should have provided this information at the time the boiler was built. This review also included any field modifications to the OEM’s brick, refractory, and insulation requirements on this boiler.

  • Create an Approach Map (like a road map) to know where to go and what to find in any given area (material type, construction, quantity, square foot area) on the boiler.

Using the Approach Map as a guide, all areas of the boiler from the trough seal at the bottom of the boiler to the roof seals were inspected. At each specific location digital photographs were taken, pertinent field observations and data recorded, and in some cases material samples taken. Much can be ascertained by looking at the condition of the brick, refractory, and insulation as it exists on a steam-generating boiler. An experienced eye can tell, for example, if the brick and refractory were properly installed, how it was installed, if it was properly mixed, if it was cured or dried, and why it failed. For this particular audit, only those areas that truly impacted the energy and steam efficiency of the boiler will be discussed.

Audit Area I – Burner

There are a total of 60 coal-fired burners on the boiler and they are by far the most energy-intensive area of the boiler. These burners require proper airflow in and around for fuel efficiency. The angle or contour of the throat area is critical for burner/fuel efficiency (stochiometry of the burner-stochiometry is the ratio of the amount of air to the burners to the amount of fuel. If the stochiometry is not right then the burner flame can get longer, there may be excessive turbulence in the flame, temperature variances, and/or an increase in ash content.)

Revealed by the Audit:

The burner throats inside the furnace were improperly installed. Most of the burner throats had missing plastic refractory material that left tubes and pin studs exposed to the burner flame. The contour of the throat made by the plastic refractory was not at the proper angle as required by the burner drawings. The missing plastic material and the improper contour of the throats had a major impact on the efficiency of the burners.

Recommendation:

It was recommended that the existing plastic refractory material be removed and replaced with a 60 percent alumina air bonded plastic material, making sure that the contour of the burner throat formed by the plastic material is at the proper angle 25 degree angle.

The burner wall area inside the wind box had exposed openings between the throat area and the membrane tube walls. These open areas were supposed to be sealed with a refractory material. Each burner had on average eight openings into the furnace, allowing gas and ash to penetrate into the wind box. This explains how the fly ash got into the wind box and would add to the inefficiency of the burners.

Recommendation:

The partial removal of the refractory around the junction point between the burner throats and the membrane tube wall and adding of new anchors, expanded metal lath and refractory around the perimeter of the burner throats and furnace wall. This would prevent future gas and ash penetration and allow proper airflow around and into each burner for proper combustion of the fuel.

Audit Area II – Super Heater Floor Seal

General Information:

This is a high erosion or abrasion area that’s located between the furnace area and the convection pass or heat recovery area of the boiler. It’s also a critical area for steam efficiency. The refractory seal that is located at the top of the sloped floor ensures proper gas flow and heat distribution for the re-heater tubes located inside the convection or heat recovery area of the boiler. Without a proper refractory seal, the flue gas is misdirected and would bypass the re-heater tube sections. This would also expose the super heater floor and screen tubes to abrasion from the flue gas and the particulates that are in it.

Revealed by the Audit:

The refractory in this area was almost completely water-washed away. There was no visible sign of any refractory support system installed as per the original equipment manufacturer’s specifications and drawings. The refractory that was installed hadn’t been installed correctly, as evidenced by the refractory covering the top of the refractory barrier plate and lacking an anchor or support system. There were also large open areas that would allow the flue gas to bypass the re-heater tube sections.

Recommendation:

A complete removal of all remaining refractory material in the tube seal area. Then, add new support material (expanded metal lath) and use a high strength refractory material with stainless steel needles for added strength. The support system, needles, and high strength refractory would help keep the seal in place during future water wash downs as well as help assure proper flue gas flow into the heat recovery area of the boiler. In other words, the flue gas would flow over the top of the seal and down over the top of the re-heater sections to maximize heat recovery for steam efficiency.

Audit Area III – Tile Gas Barriers

General Information:

This is another critical area that’s very important for steam efficiency. The tile baffles located in the convection pass or heat recovery area of the boiler ensure proper gas flow and heat distribution for the re-heater tubes that are located inside the convection or heat recovery area. Without these tile baffles, flue gas would pass around instead of over and through the re-heater tube sections. The misdirection of the gas flow would also cause erosion of the re-heater tubes.

Revealed by the Audit:

The tile baffles were deteriorated in most of the locations, especially on the overhead areas. It was quite obvious that the tile baffles were not able to prevent the flue gas from passing down the open cavity at the ends of the re-heater tube sections.

Recommendation:

The total replacement of the tile barriers and the elimination of the tile barriers on overhead areas, which were not needed for proper gas flow baffling. Also, setting each tile in an air-setting mortar. (The existing tiles had been laid loose without any mortar.)

Audit Area IV – Convection Pass Roof Tubes and Furnace Roof Tube Area

General Information:

This is another critical area of the boiler for steam and energy efficiency. The roof refractory ensures that the gas and fly ash stay inside the furnace cavity. If the refractory fails to do its job, the flue gas and fly ash will penetrate the penthouse area and cause extensive damage. (Remember that fly ash had to be removed from the entire penthouse prior to the Energy Audit.) Proper refractory roof construction will ensure that the boiler will use the least amount of fuel to achieve its steam and heat requirements, translating into major cost savings.

Revealed by the Audit:

Large cracks were found in the roof tube areas, allowing flue gas and fly ash to penetrate into the penthouse. These cracks occurred because the installing contractor used too small of an expanded metal lath (a lath with too small a size of the diamond openings) to support the refractory. The improperly sized expanded metal lath prevented the gun-applied refractory from penetrating down through the lath to the roof tubes for a gas-tight seal between the penthouse and the furnace area.

Another contributing factor was that the lath had not been welded to the roof tubes in many areas. This allowed the loose lath (and refractory on top of the lath) to float when the boiler was operating and gave easy access for the fly ash to enter the penthouse. Also, the refractory seal at the junction of the roof tubes and the sidewall tubes had not been installed. This side wall seal is vital for a gas-tight construction between the furnace cavity and the penthouse. When the boiler is put into operation the tubes expand and the corners, without any refractory seal, would allow hot gases (more than 2,000 degrees Fahrenheit) and fly ash to enter the penthouse. The higher-than-design temperatures inside the penthouse also caused serious structural damage to the tube and header supports.

Recommendation:

Using a larger size expanded metal lath (1 1/2 inch x 13 gauge) welded to the roof tubes for the proper support of the roof refractory. The larger size lath would also allow the refractory material to penetrate through the lath down to and between the roof tubes and give a good gas-tight seal. We also recommended the installation of the refractory corner seals at the junction of the roof tubes and side wall tubes. The proper installation of the refractory (and lath) on the roof tubes and adding corner seals would prevent any further gas and fly ash penetration into the penthouse and would help make the boiler more energy efficient.

Audit Area V – Super Heater Seal Penetrations

General Information:

The super heater seals are the most important for energy efficiency of any area found on a steam-generating boiler. The super heater tubes that pass through the roof tubes must be gas-tight to prevent the flue gas and fly ash from penetrating into the penthouse. Like the roof construction, the super heater seals will ensure that the boiler will use the least amount of fuel to achieve its steam and heat requirements, producing the biggest fuel cost savings.

Revealed by the Audit:

There was extensive damage and large open areas at all the super heater seal boxes. This showed that the refractory for the seal boxes were not installed correctly. The visual inspection revealed a number of installation mistakes: 1) a lack of expansion joints per specification in each layer of the refractory seal; 2) the refractory material had been gunned-applied with irregular thicknesses; 3) there were no indications that a parting agent had been used to keep the refractory from sticking to the super heater tubes. The cracking around the tubes was caused in many areas by the lack of a parting agent. The refractory failure allowed the flue gas and fly ash to penetrate into the penthouse area.

Recommendations:

1. Replace the seals per the original design.

2. Upgrade to a higher strength refractory.

3. Add expansion joints in the refractory seal design.

3. Add anchoring materials (lacing wire).

4. Use a parting agent on the super heater tubes.

5. Change the application for installing the refractory to a poured application in lieu of gunning. This would allow for the proper thickness of the refractory and allow for incorporation of the expansion joints in each layer of the seal.

Audit Area VI – Turbine Generating Insulation

General Information:

The insulation on the generating turbines is required due to the surface temperature of the turbine being more than 1,000 degrees F. Without the proper insulation materials and installation there will be extensive and valuable heat and steam lost. This is where a power plant makes its money. The insulation on the turbines is essential to prevent valuable heat loss.

Revealed by the Audit:

A ceramic fiber 2,300-degree-F blanket was used with a cloth-type cover so the insulation blankets could be reused. The condition of the outer finish of these blankets and the attachments used showed that the steam temperatures exceeded the temperature limits of the finish material. This wasn’t only burning up the cloth material and the attachments that hold the blanket together, but also allowing valuable heat to escape from the turbine surface. It was determined that the thickness of the removable blanket was inadequate and the temperature limits of the insulation material being used far exceeded the temperature requirements.

Recommendation:

1. Use a mineral wool 1,200-degree-F blanket meeting ASTM C-592 class II in lieu of the ceramic fiber blanket. The temperature limits didn’t dictate the use of a 2,300-degree-F product ceramic fiber product. This would save approximately $3 per square foot for every inch of insulation thickness required.

2. Increase the insulation thickness.

3. Use a higher-temperature blanket facing or cover material.

4. Use a higher temperature insulation attachment.

Audit Area VII – Super Heater Header and Leg Insulation inside the Penthouse Area

The super heater headers and legs operating above 850 degrees F must be insulated to keep the temperature inside the penthouse between 850-875 degrees F and to prevent excessive heat loss.

Without the proper materials and installation, there will be extensive and valuable heat and steam loss along with damage to the penthouse casing and structural damage to the penthouse itself.

Revealed by the Audit:

The condition of the structural steel inside the penthouse and the penthouse casing revealed that the temperatures inside exceeded the temperature limits of 875 degrees F. Though this could have been caused by refractory failures inside the penthouse, it was noted that the wrong insulation thickness (1 inch in lieu of the specified 1 1/2 inch) contributed to the damage done by the increased temperatures inside the penthouse.

Recommendations:

1. Use a mineral wool 1,200-degree-F blanket meeting ASTM C-592 class II in lieu of the ceramic fiber blanket. The temperature limits did not dictate the use of a 2,300-degree F product ceramic fiber product. This would save approximately $2 per square foot.

2. Increase the insulation thickness from 1 inch to 1 1/2 inch.

3. Use a higher temperature insulation attachment.

4. Add insulation supports to all top surface areas where the open space between the headers or tubes on the top surface exceeded nine inches wide.

Final Thoughts

The energy audit discovered some very specific areas that directly affected the amount of fuel used to meet heat and steam requirements. A boiler, regardless of size, will always use more fuel if the brick, refractory, and insulation are not installed correctly. After all the changes and corrections were made, it was estimated that the power plant can expect an annually savings of up to $100,000 in pulverize coal (energy) cost. This is why experts say, "Brick, refractory, and insulation installed to save energy also saves money at a rate that is essential for efficient plant operation."

References
  • ASTM C-64
  • Refractories in the Generation of Steam Power – McGraw-Hill Book Company, F. H. Norton (1949)
Figure 1

Sketch of an approach map

Figure 2

Burner throat being inspected

Figure 3

A burner inside a windbox

Figure 4

Floor seal showing no refractory

Figure 5

A cracked and broken gas baffle tile

Figure 6

A gas baffle tile that has broken and fallen away

Figure 7

Expanded metal lath that’s not welded to tubes

Figure 8

Close-up of two different sized laths used on roof

Figure 9

Roof area with crack in refractory

Figure 10

Junction of roof and side wall with no refractory seal

Figure 11

Downward view of heater seal

Figure 12

Super heater seal box with refractory in place

Figure 13

Top and middle layer of refractory seal

Figure 14

Inspecting inside a penthouse