OK. But at that small a diameter of the pipe, you will be very close (if not right at) the limiting diameter for minimum heat loss after insulating the pipe. If the diameter of the insulated pipe gets larger, the increased area of the OD of the insulation increases heat loss to the environment, even though the insulation is thicker. Now, ADDING a steam heat trace pipe INSIDE the primary pipe insulation is only going to make those losses greater. Further, just claiming "steam is on-site" does NOT route that steam heat trace pipe over to either end of the new 500-800 foot pipe, adding the increased steam traps (and their losses) to the feed pipe, heat trace pipe, and return pipe(s). And all of that heat trace pipe needs to be welded, NDE, and itself insulated and supported.
Electric makes much more sense: The new electric bands go inside the new pipe's insulation. No other new pipe supports, new pipe support structural steel and foundations, no new cuts and taps into existing steam lines ......