Should an aging heat exchanger be replaced? If so when, and with which new design option?

This study was commissioned to ascertain the business case for re-tubing and to evaluate the life cycle cost benefits of alternative materials.
Results showed a benefit of NPV £390k compared to renewal at the previously presumed timing
Strategy was NPV £450k better value (lower life cycle costs and risks)
Process seen as a major step forward in objective decision-making
Problem description

Heat exchangers are an integral part of processes plants: an oil refinery will typically have many exchangers of different designs, ages, and criticalities. Heat exchangers are susceptible to fouling which reduces the efficiency of heat transfer and results in either increased energy/operating costs or reduced output. In addition, they can suffer a number of different degradation mechanisms and failure modes including and tube lockages, corrosion, erosion, and cracking, resulting in leaks in tubes or shells. Depending upon the service, these leaks can be a minor nuisance (e.g. water leaks), or represent a major safety risk (pressurized gas). Such heat exchangers are periodically opened and cleaned to recover their thermal efficiency, at which time any leaking tubes are usually plugged. However such intrusive maintenance can also introduce wear and damage, shortening the life of the tube bundle.

The heat exchanger examined in this study was demonstrating an increased frequency of tube failures (pinhole leaks) and lower performance due to the cumulative number of plugged tubes. So a replacement tube bundle was proposed. The plant engineers also felt that changing from a Copper/Nickel alloy to Titanium material would yield greater reliability and longer bundle life. This study was commissioned to ascertain the business case for re-tubing and to evaluate the life cycle cost benefits of the alternative materials.

The study we performed

The SALVO process provides the structured navigation and evaluation discipline to ensure all factors, stakeholders, and scenarios were explored, quantified, and evaluated on a consistent and auditable basis. This process was supported by real-time cost/risk modeling and ‘what if?’ calculations using the DST Lifespan Evaluator™ tool.

Figure 1 shows the Life Cycle Costs and Risks (in NPV ‘business impact’ ) of the two options for replacement (Titanium and Cu/Ni). The optimal timing for replacement with higher cost Titanium tubes would be in 10 years’ time, whereas the cheaper Cu/Ni option is worth installing in just 8 years. Taking the subsequent (future) life cycles into account also, the total business impact favors the Cu/Ni option, with the earlier replacement point. NB but not as soon as all expected – the renewal had been proposed for the next shutdown opportunity in just 2 years’ time. The SALVO rigor retains total transparency of all the risk, performance, Capex and Opex contributions, so that uncertainties, alternative scenarios, and other ‘what if?’ options were explored in a matter of minutes.

This study involved a small team comprising operations, maintenance, engineering, and commercial staff. It needed just 2 hours to build the ’base case’ scenario, model the risks, costs, and operational options available, and identify the optimal strategy for like-for-like renewal. The team then developed the “replace with Titanium” scenario and explored the optimal timing and whole life cost/risk impact of this option. A formal decision-recording stage captured the optimal strategy, the audit trail for why this represents the best total value, the multi-disciplined team observations and endorsements, and the practical implementation actions.

To perform the complex reliability, risk and financial ’what if?’ calculations, this study used decision-support software called DST Lifespan Evaluator™. This tool was developed as part of the international SALVO project to support the analysis of asset life cycle decisions at both design/selection/procurement stage and in end-of-life decision-making (e.g. refurbish/replace justifications and optimal renewal timing). Like other modules in the DST Asset Strategy Evaluator™ suite, the tool provides:

  • A structured logic, with a clear ‘storyboard’ checklist to ensure all factors are considered.
  • The disciplined process to capture and quantify the knowledge of cross-disciplined teams, including their uncertainty.
  • State-of-the-art analytical algorithms to evaluate the life cycle cost, risk, and performance of decision options
  • Sophisticated, extremely rapid sensitivity analysis to identify which assumptions have what effect upon the decision.
  • Rapid creation and evaluation/comparison of multiple scenarios, enabling the study team to compare alternatives and explore ’what if?’ ideas – instantly.
Results and Benefits

The study determined the optimal end-of-life strategy for the current tube bundle was to replace it with a like-for-like Cu/Ni design in 8 years’ time. This showed a benefit of NPV £390k compared to renewal at the previously presumed timing (in a shutdown in 2 years’ time). And this strategy was NPV £450k better value (lower life cycle costs and risks) than upgrading to titanium to achieve higher reliability and longer bundle life.

All study team members had been expecting that the increased reliability and life of the Titanium material would be worth its extra cost. But this was proven not to be the case. The team all accepted the outcome, based on the whole life cycle cost/risk/performance and this mind-changing was seen as a major step forward in objective decision-making.

The Woodhouse Partnership would be delighted to show you how the SALVO process and Decision Support Tools can be implemented to benefit your business, contact us now for a free initial consultation. We look forward to hearing from you.

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Aleck Santamaría De La Cruz

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Consultant, Instructor and International Lecturer on issues related to project management (risk management), operational reliability, strategic management of operations, maintenance, Asset Management in the energy sector (ISO 55001) and Applied Data Analytics.
PMP, CMRP, IAM and CAMA certifications, being recognized by the SMRP in 2019 as CMRP of the Year

George Galambos

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George has assisted organizations with the development of PAS 55, ISO 55000, and GFMAM AM Landscape aligned asset management systems (AMS), has performed gap analyses of their AMS against industry standards and best practices, and has guided them through the creation of strategic asset management plans (SAMPs), asset management plans (AMPs), AM policy and supporting documents. He has undertaken asset risk modelling to ascertain organizations’ capability to sustain their desired levels of service. George has performed asset health-informed lifecycle cost modelling and forecasting capital and operational expenditures over near and long-term planning horizons.

John Woodhouse

With 30 years’ experience in utilities, oil & gas, transport and other sectors, John is one of the most widely known experts in integrated asset management projects for some of the largest companies in the world.

John is a Founder and Life Fellow of the IAM; he has written 4 books, chaired the development of BSI PAS55 and represents the UK on the ISO55000 committee.

He also led the international MACRO and SALVO collaboration projects in optimised asset management decision-making.

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