Energy consumption in industrial processes is mainly in the form of heat. Thus, heat recovery is one of the main focuses in industrial energy efficiency problems. Heat integration (HI) techniques have been studied extensively to solve such problems. One of the main drawbacks of the classical heat integration approaches is that heat can be transferred from any stream to another as long as it flows from higher temperature intervals to lower ones, which results in impractical scenarios, in which heat is recovered over long distances. This work proposes a heat integration method which takes into account heat distribution losses. The heat losses are calculated as a function of the distance between the original location of the stream and the location it is used and the supply and return temperatures. The heat cascade is written so that the energy balance is closed for each location. This way, while heat recovery within the same or close location is promoted, heat transfer over long distances is discouraged. Using the proposed method, practically infeasible solutions are eliminated at the level of optimisation. At the same time, the temperature drop and the heat losses resulting from heat exchange over long distances are calculated. The method is applied to a case study with two plants. While the total operating cost can be reduced by 25% by heat integration within and between the sites, not exchanging heat between the two sites is found to be more beneficial when heat losses are taken into account.