Heat exchanger opportunities and developments

Historically, the company had always targeted clients in the oil sands, petrochemical, and gas processing industries. Since 2015, however, EIL’s leadership team has leveraged the expertise built in supplying these markets to diversify the business into new, less cyclical, and more environmentally sustainable end uses such as clean power generation, liquified natural gas, compressed air power storage, geothermal, and biofuels applications.

Diversification

As part of EIL’s diversification strategy, the company recently acquired HRS Heat Exchangers Limited (HRS). With HRS’s 40 years in business, the companies benefit from a combined 100+ years of experience. “HRS is complementary to EIL; they do the same thing we do but in different end-use sectors, such as food, beverage, waste-water treatment and pharmaceutical applications. We now have the advantage of creating new growth opportunities and offsetting some of that inevitable cyclicality occurring when you are too exposed to one sector,” Mark explains. “We like to say that the sun never sets on EIL, as the acquisition means that we now have operations and major customer relationships in 11 countries around the world, and there are some very exciting opportunities in these markets.” The company expects its revenue to more than double again over the next three to five years, thanks in part to the integration of HRS.
“Heat exchangers are one of those things that, besides those people who are working in or close to the industry, nobody really knows what they do or how fundamental they are to pretty much everything that we do. All traditional industries are having to retool to become more energy efficient. In addition, building and operating all the low carbon infrastructure needed to meet the challenge of climate change involves tremendous amounts of heat generation and transfer. So, not only will the heat exchanger business be providing growth in the future, it will also provide a robust bridge between the present and the future by helping to make the current industrial base more effi cient. In short, we believe the heat exchanger business provides a great runway for growth.”
This diversifi cation provided by the HRS acquisition and the rapid transition to energy effi cient industrial processes gives EIL a broad range of growth opportunities, but the key, according to Mark el Baroudi, is to choose only a select few. “I spent my first 15 years in the strategy business and it’s really just about making choices and allocating your capital appropriately.”
“To effectively support our strategy, we have an international manufacturing network in which we are investing aggressively to expand capacity, streamline business processes, and enhance fabrication technologies. This will support EIL in its mission to deliver innovative custom heat transfer solutions at competitive to our blue-chip customer base worldwide. We are a differentiated, custom provider, solving some of the toughest problems in heat transfer. As such, we are not a lowest price, minimum quality solution provider. Rather, EIL’s innovative solutions make our customers more competitive by driving the lowest total product and project life cycle costs, and keeping our operations as cost effective as possible is crucial to helping us do that.”

New opportunities for heat exchanger applications

Some of EIL’s recent projects include the build-out of one of the largest natural gas transmission and storage networks in the world, the development of heat transfer solutions for a leading compressed air energy storage application, the design, fabrication and supply of a world-scale food processing facility, and a cutting-edge biofuels facility.
Of the compressed power storage application in particular, Mark says: “Power storage is critical in developing the rapidly growing worldwide renewable energy network – and whilst batteries seem like the most obvious answer right now, they have some real challenges in terms of raw material availability and toxicity, as well as the effectiveness and capacity of the exiting recycling infrastructure”.
“Compressed Air Energy Storage (CAES) is a simple proposition, and there are a number of ways to do it, but essentially CAES is a way to store energy for later use using compressed air. At a utility scale, energy generated during periods of low demand can be used to compress air. The energy stored in the compressed air, can then be released during peak periods to drive a generator to produce electricity. Other processes cryogenically freeze the air and then expand it rapidly. You can store a lot of energy in these systems; they are going to be vital to provide off peak power for intermittent power sources such as wind and solar . We have been able to custom design the heat exchangers necessary to run in these operations – they have their own unique features to properly address the cyclic nature of the operation resulting from rapid changes in temperature and pressure.”
Mark notes that there have been high profile investments from some of the industry’s big players, such as Sumitomo’s HighView project in the UK – air power storage using cryogenics – and Goldman Sachs investment in Hydrostor, based in Canada. “It’s rapidly becoming a more popular Energy storage solution internationally, and provides a scalable, cost effective and environmentally responsible alternative to battery projects, although, overall, it’s going to take a network of various solutions to make renewable energy power grids really work.”

Anti-fouling technology

Another chapter of the renewables story seeing rapid development is biofuels technology, another key application for heat exchangers. When biomass materials (natural organic matters such as forest residues, wood waste or crops) are heated in the absence of oxygen, they can produce a liquid (bio-oil or bio-crude) as well as some gas and solid fuels. This liquid can be processed into low-carbon fuels using existing petroleum refining technologies. “There are, as of today, 204 active biofuels projects in North America valued at over $35 billion alone,” says Mark.
But when the exhaust of the high-temperature combustion of those biomass materials is rapidly cooled, suspended carbon and other tar-like debris are then precipitated and coat the tubing of the heat exchanger and the surface of related equipment, resulting in reduced heat transfer effi -ciency and flow blockages. This fouling can debilitate these facilities altogether, which then require very expensive shutdowns to have equipment cleaned or replaced. Fouling is a huge problem worldwide, and fouling costs due to additional fuel consumption, maintenance, and loss of production has been estimated at an astounding 0.25 percent of the GNP of industrialized countries (source: HTRI). This is a real problem which offers opportunities for EIL’s anti-fouling solution.

EIL has spent a decade collaborating with a major global chemical supplier on R&D, and more than eight years of full-scale field evaluation with a large Canadian energy company, to prove the effectiveness of its custom fluoro-polymer coating technology in combating the most extreme fouling scenarios for oil and gas process streams. The results of the full-scale pilot project in a live plant were impressive, as Mark explains: “Two identical shell and tube exchangers ran in parallel, one coated, one uncoated. Not only was fouling minimal in the coated exchanger, but when any deposits formed on the tube wall, they were subsequently removed by the flowing process stream as it could not attach itself to this highly omniphobic coating system. This means, it exhibited self-cleaning behaviour and, in practical terms, zero fouling. This unit has operated for 9 years and has required no cleaning beyond a wash down with a garden hose, whilst the uncoated unit exhibited fouling that was many times more severe during the same time interval, requiring constant intervention and cleaning.
Millions of dollars in additional orders have now been booked by the same customer, and additional applications have also been identified in refining, LNG sea water cooling, alumina refining, syn gas production, and natural gas processing.” According to EIL, its novel coating technology is unique, relative to anything else currently on the market. “It is an extremely thin coating and has excellent heat transfer properties,” says Mark. “It has remarkable fouling release with corrosion resistance properties – many things that foul can also be corrosive. It is a best-in-class, premium priced solution at the moment, but our aim now is to scale up volumes in order to bring costs down for a much broader range of customers that we know could really benefit from this technology.”

The benefits of EIL’s anti-fouling solution include:

• Substantial reduction in cleaning frequency with the potential to eliminate routine cleaning altogether (the full-scale field unit noted above has not required cleaning since start-up in 2013)
• Improved process efficiency and stability by tackling fouling before it starts
• Potential to specify smaller units due to reduced fouling factors
• Capital savings via the elimination of redundant exchangers previously required as swing units

But it is not just the coatings. Mark refers to HRS’s experience with scraped surface heat exchangers and the use of corrugated tubes to reduce fouling: “We are bringing together a portfolio of anti-fouling solutions for our customers in a broad range of end-use applications.”

Industry developments

EIL’s own research combining various sources, as well as the experience of its extensive international customer base, suggests that demand for heat exchangers worldwide is expected to enter a very exciting growth phase for several fundamental reasons:

1. The sustained expansion of the industrial sector in developing nations
2. Increasing investment to upgrade existing manufacturing facilities, and specifically to achieve greater energy efficiency, in developed nations
3. Investment in an entirely new, low carbon energy
infrastructure base

Growth in developing nations

The relentless drive to improve manufacturing profitability in developed countries has resulted in greater investment in offshore capacity in lower cost regions. EIL believes that worldwide demand for heat exchangers is expected to increase by at least 5% per annum over the next 5 years, however demand in some developing countries is likely to increase by more than 8% annually. In 2012, the developing world accounted for about 30% of all installed heat exchangers, and within 5 years, this share is projected to increase closer to 40%. Asia Pacific is forecast to emerge as the fastest growing regional market, becoming by far the most important regional market for heat exchangers.

Increasing energy efficiency in developed economies

The growth in demand for heat exchangers will also be driven by the need for greater energy efficiency in the developed world, where the largest percentage of manufacturing facilities – and, consequently, heat exchangers – are currently installed.

Rapid growth in low carbon energy infrastructure

Heat exchangers play an essential role in the prevention of greenhouse gas emissions and the reduction of the overall environmental impact of industrial processes, by reducing energy consumption or recovering energy from processes in which they are used. Increasingly robust government policies to reduce greenhouse gases are driving the need for energy efficiency and rapid investment in low carbon energy infrastructure.

As a result, there is a healthy outlook for renewable energy projects. Global energy demand (electricity) is projected to rise to over 30,000 TWh by 2030 (Source: IEA). At the same time, governments and companies having committed themselves to reducing CO2 emissions is driving investment in environmentally friendly energy sources, such as next generation nuclear, solar, wind, LNG, geothermal power production, biofuels, carbon sequestration, compressed air power storage, and hydrogen production.

Given all these developments, EIL and its investors believe that this is an exciting industry, and that there is real potential in the trends that are driving future growth.

“It’s been viewed by some, not close to the industry, as a “dirty”, low tech, low-growth and local manufacturing business… but we think it is anything but that,” says Mark. “The heat transfer industry is crucial to the development of everything that the world is trying to do to become cleaner and more efficient. The heat exchanger companies that provide those solutions need to evolve to take advantage of that reality, by building capabilities to deliver innovative, price competitive heat transfers solutions to meet their customer needs internationally, leverage more truly innovative technology, business processes and enterprise systems to scale up efficiently, and seek to become better capitalised in order to achieve those objectives. That is what we are trying to do.”