Abstract The province of Alberta, Canada hosts an estimated 170 billion barrels of crude bitumen reserves in the Athabasca, Cold Lake and Peace River deposits. These reserves are commercially recovered through surface mining or in situ recovery methods. Most of the produced bitumen is converted in surface upgraders to synthetic crude oil (SCO), a 31–33°API oil product. Next, SCO is converted to transportation fuels, lubricants and petrochemicals in conventional refineries and petrochemical industries. In situ recovery or mining as well as bitumen upgrading and refining are energy intensive processes that generate huge volumes of acid gas, consume massive volumes of water, and are costly. Bitumen upgrading requires hydrogen, and currently most of it is produced by steam reforming of methane. Alternatively, hydrogen can be generated by in situ gasification of bitumen. In situ gasification of oil sands is potentially more energy efficient with reduced emission to atmosphere since acid gases are sequestered to some extent in the reservoir. Also, water usage is lowered and heavy metals and sulfur compounds in the bitumen tend to remain downhole since the main product is gas. The objective of this research was to understand and optimize hydrogen generation by in situ gasification from bitumen reservoirs. The central idea was to recover energy from the reservoir in the form of hydrogen and bitumen. In situ combustion has been attempted in the field, in a pilot run at Marguerite Lake. In this pilot, the produced gas contained up to 20mole percent of hydrogen. In the current study, the Marguerite Lake Phase A main-pattern in situ combustion pilot was history-matched as a basis to understand a field-operated recovery process where in situ gasification reactions occur. Based on Marguerite Lake in situ combustion pilot observations, a new in situ bitumen gasification process, based on a Steam-Assisted Gravity Drainage (SAGD) well configuration, was designed and compared with conventional SAGD on the basis of energy investment, emission to atmosphere and water usage. The results show that the amount of energy produced per unit of energy invested for the in situ gasification process was greater than the steam alone recovery process with less than half the water usage. The cyclic injection of steam and oxygen as compared to steam injection alone can permit design of oil-alone to oil+syngas production processes.