The industrial heat exchanger network synthesis (HENS) problem is very complex and involves combinatorial problems in the "matching" between hot and cold streams to enhance heat recovery, temperature dependent physical and transport properties, the choice of flow configuration and materials of construction for the heat exchangers, the combination of "hard" and "soft" problem data (some target temperatures must be met, while others may be varied within limits if this is of advantage for the total process economy), various kinds of constraints (forbidden and compulsory matches) and different types of streams (liquid, vapour and mixed phase). Pressure drop limitations and the cost of piping are also important. The design objective includes a quantitative part (cost of heat exchange equipment and external utilities) and a qualitative part (safety, operability, flexibility and controllability). This makes it difficult to establish a single objective function to evaluate the design. Due to topological effects (services are added or removed), the investment cost function exhibits discontinuities since there is a unit cost involved in the equipment. Some of the qualitative aspects mentioned above cannot easily be formulated ahead of time. The cost of flexibility can be calculated, but only for given situations (networks). The global optimum is thus hard to guarantee and the engineer has to resort to simplifications of the model and some heuristic rules that will lead towards a near optimal solution. Research is progressing along three different lines which are the use of thermodynamic concepts, mathematical methods and the use of knowledge based systems for process design. In order to solve real life industrial problems, the engineer should take advantage of all these disciplines. However, the skill and experience of the engineer himself will remain of vital importance. This paper presents the state of the art of HENS methods together with some applications to previous literature problems. An evaluation of the various methods is performed from an industrial point of view. There is also a brief discussion of some of the software tools available to solve such problems. The presentation will emphasize on the design of the heat exchanger network itself although interactions with the rest of the process and the utility system inevitably will be discussed. The aspects of flexibility and operability will also be briefly mentioned. HENS is the most mature field of process synthesis when it comes to systematic methods. The increase of energy prices during the 70s and early 80s has been the major driving force. As things have been developed, however, the emphasis has changed from energy optimal (minimal) structures to cost optimal networks. The latest developed methods can find the proper trade-off between investment cost and operating cost for any price scenario (including regional factors such as the cooling water temperature etc.) ahead of design. Nevertheless, all problems have not yet been solved, and important research is still being conducted addressing all three areas of HENS, which are targeting, synthesis and optimization. Industry spends a significant amount of money to carry out energy analysis of new and existing plants, to support academia in their research and to develop and acquire accurate and efficient computer tools. It is the involvement of our company in these areas that has given us the opportunity, on an industrial basis, to review the field. In the past there have been two schools of HENS. One relies on thermodynamic principles and a few heuristic rules, where the designer manually (or interactively if software is available) synthesizes the network. The other, more automatic, approach relies on mathematical methods like linear and nonlinear programming. The relative merits of these schools will be discussed with reference to case studies. There will also be a short presentation of the historical development within these schools. © 1990.