In this study an algorithm which is based on the second law of thermodynamics is presented for the synthesis of heat exchanger netwooks. For this purpose a new dimensionless group)the number of exergy loss units) to represent the degradation of energy is defined. The design objective is to find a proper network synthesis minimizing the number of heat exchanger units required under the minimum utility consumption. By testing seven well-known standard problems dealing with 4 to 7 streams, this method proved to be efficient in generating an optimal or near-optimal structure by simple hand calculations. the present method can be used for a preliminary design of actual of actual heat exchange processes.