That is the Birkeland-Eyde process, which was superceded by the Haber-Bosch process because it is much more energy effective.

As far as I understand, the reasons for using methane as the hydrogen source in industrial processes is because of costs and the difficulty in scaling electrolysis industrially.

Right, makes perfect sense.

So this is pretty far outside of my area of expertise, but https://pmc.ncbi.nlm.nih.gov/articles/PMC8133363/ suggests that there may be an evolution of Birkeland-Eyde that isn’t nearly as bad as the original process was. I haven’t gone through this in detail and even if I had I probably don’t have the background to do it justice.