This paper presents an analysis of membrane reactor operation and design for enhanced hydrogen production. Silica derived membranes were used for gas permeation studies and a membrane reactor for the water gas shift reaction. A model of the equilibrium reaction is developed and analysed with respect to operational factors such as temperature and pressure analysed in consideration for production of a 99% pure H-2 stream. These factors influence the optimisation of the reaction and permeation rate as well as the equilibrium conversion. It was found that using H-2 permeation membranes, the H-2 equilibrium could be shifted towards the products. In turn, this provided better conversion at higher temperatures. The cost of H-2 production using membrane reactors is dependent upon several engineering process parameters such as reaction rates, permeation, selectivities, temperature and pressure. Silica membranes assembled in membrane reactors out performed conventional reactor systems. Silica membranes were synthesised showing permeations of 5 x10(-8) mol m(-2) s(-1) Pa-1 and H-2/CO selectivities >10. The silica membrane capital cost per kg H-2 produced ranged from US$ 0.25 to 3.00 for 10 to 80% H-2 separation respectively.