A one-dimensional steady-state heterogeneous model has been used to simulate the conventional CPO reactor. With the mechanism of O-2 permeable membrane, the model has been developed to simulate O-2 membrane reactor. The output temperature and the mole flow rates of different species in the tube side and the shell side can be calculated. They are the basis for the exergy analysis of the conventional CPO reactor with air, the conventional CPO reactor with pure O-2, and the O-2 permeable membrane CPO reactor. The simulation and exergy analysis results indicate that when the inlet conditions are the same, for a given methane conversion, the exergy efficiencies eta(2) and eta(1) of conventional CPO reactor with pure oxygen is lowest among the three reactors, because of the large amount of accumulative exergy required for obtaining pure oxygen.The exergy efficiencies eta(1) and eta(2) of membrane reactor are comparable with conventional CPO reactor with air and much higher than conventional CPO reactor with pure oxygen. As the membrane reactors can carry out simultaneous separation and reaction, in the mean time, removal of nitrogen from the product stream can be accomplished; the membrane reactor has advantages compared to other types of reactors.The operation of the membrane CPO reactor is more favourable when the inlet temperature is increased and the operation pressure is decreased from a thermodynamic point of view. (C) 2003 Elsevier Science Ltd. All rights reserved.