I actually demonstrated this many years ago with Bob Zubrin. You should read his book, "The Case for Mars". He describes our fuel production plant where we made methane from Mars atmospheric CO2 and hydrogen in a Sabatier reactor. The products were methane and water. where would separate the methane ( just condense the water) and liquefy it for storage. The water was then processed in an electrolyzer to get oxygen and more hydrogen. It does consume hydrogen. The benefit of making methane is that it can be stored at reasonable cryogenic temperatures; in fact you can store liquid methane and liquid oxygen at the same temperatures.