The study of microchannel reaction engineering and applications to compact chemical reactors has expanded rapidly both academically and industrially in recent years. Velocys((R)), a spin-out company from Battelle Memorial Institute, is commercializing microchannel process technology for large-scale chemical processing. Hydrogen production at industrial rates in compact Velocys hardware is made possible through increases in both heat and mass transfer rates for highly active and novel catalysts. In one example, a microchannel methane steam reforming reactor is presented with integrated catalytic partial oxidation of methane prior to catalytic combustion with low excess air (25%) to generate the required energy for endothermic methane steam reforming in adjacent channels. Heat transfer rates from the exothermic reactions exceed 18 W/cm(2) of interplanar heat transfer surface area and exceed 65 W/cm(3) of total reaction volume for a methane steam reforming contact time near 4 ms. The process intensity of the Velocys methane steam reformer well exceeds that of conventional steam reformers, which have a typical volumetric heat flux below I W/cm3. The integration of multiple unit operations and improvements in process intensification result in significant capital and operating cost savings for commercial applications. (C) 2004 Elsevier Ltd. All rights reserved.