Abstract Work exchanger network (WEN) integration is crucial way to conserve energy for gas networks. Refinery hydrogen allocation network (HAN) determines its work sources and sinks of hydrogen streams and even WEN. Hydrogen gas streams are always non-ideal and there is also energy loss in their pressurization and depressurization processes through direct work exchangers. Based on thermodynamic principles for gas property and work exchange through compressors, expanders and direct work exchangers, this paper proposes a novel methodology for cost-effective refinery hydrogen networks. A stage-wise superstructure consisting of hydrogen allocation network (HAN) and work exchanger network (WEN) is built as problem illustration and the corresponding mixed integer nonlinear programming (MINLP) models for HAN and WEN are formulated to successively perform mass and work networks integration for total annualized cost (TAC) minimization. A refinery case is studied and results show that WEN can conserve 27.4% power utility consumption and reduce 50.9% investment cost. Case study results comparison demonstrates that the consideration of thermodynamic principles is of great significance to real-world energy conservation and investment cost reduction of WEN.