Insulating a "utility closet"

[isuace]

My furnace and water heater are in a small closet off of a half bath on the first floor of my house. The closet sits by an exterior wall. There is only fiberglass batting for insulation in this closet.
Sometime before I bought the house, a new water heater was installed. At that time, some of the insulation was knocked down so it's not insulating 100%.
What I want to do, if I can, is put the insulation back in place and add something to the inside wall of this exterior wall to A) keep the insulation in place and B) add some extra insulation and stop drafts.
I was thinking that I might be able to put in some sort of foam board, but I don't know if I can do that being so near to the furnace.
Any advice on how to seal up this gaping hot air leak?

Here is a pic of the close that I'm describing.

 

[jonny o]

Both appliances should have a clearly defined distance that they need to keep. Check the manuals.

Foil lined foam isn't necessarily made for fire or heat resistance, but it would make me feel better than raw foam if I had to encroach on the minimum safe distance.

 

[rburke65]

You could staple some 6 mil plastic over the studs and then use some 1" Foil lined foam. If you are pinched for room, you could just pull out the hot water tank......should have 2 unions and kill the gas. This would free up some "work room" for ya.

 

[isuace]

The water heater is electric, so that would simplify moving it somewhat. Would it be worth the extra cost to go with something like this over regular foil faced foam board?

 

[rburke65]

That would certainly be easier, because its flexable. Don't know the R value that you are looking to achieve. They make 4 foot wide, plastic faced fiber batts for the roofs of steel buiildings and pole barns....that would be flexable, white, and a r value of 13, I think.

 

[isuace]

That stuff is 3.7, but there is already insulation in the wall that I would guess to be 11 or 13. The main purpose of lining the inside would be to stop the drafts and keep the fiberglass insulation from sagging or falling out.

 

[coravetz]

I agree with johnny o and you should check the manuals or mfg recommendations. Just because it was installed, doesn't mean it was done correctly. Maybe it's me, but I'd want the reassurance.

Also, if you are going to pull the water heater so you have room to work, I'd install a drain pan (and pipe to outside) under it when you put it back. That could save your floor, walls and potentially other rooms if the thing ever fails.