Methane separation and hydrogen recycle offers an attractive approach for high-Btu gas production, provided there are no excessive counterbalancing costs. If operated as a fixed-bed process, it presents an adaption of the Lurgi pressure gasifier modified for hydrogen recycle to the upper portions of the fuel bed. If operated as a fluidized process, it does not differ in principle from fluidized-hydrogenation, residual-fuel gasification schemes proposed or under investigation. A single-vessel fluid bed, where both oxygen and hydrogen are introduced, is disadvantageous by virtue of rapid fuel mixing, resulting in some volatile matter being burned by oxygen. Because the volatile portion of the fuel is the most readily hydrogenated component, an effective fluid-bed system would require a separate reactor to complete the volatile-matter hydrogenating reactions and a second vessel, immediately below the first, to gasify residual carbon with oxygen and steam. The hot gases from the second vessel would be admitted to the hydrogenation reactor. An alternative to methane separation in this proposed process is catalytic methanation of carbon monoxide and hydrogen in the raw gas, yielding gases of high methane content but requiring an external source of hydrogen.