Concerns about the depletion and increasing price of natural gas are generating interest in the technology of synthetic natural gas (SNG) production. SNG can be produced by the methanation reaction of synthesis gas obtained from coal gasification; this methanation reaction is the crucial procedure for economical production of SNG. We investigated the effect of operating parameters such as the reaction temperature, pressure, and feed compositions (H2/CO and CO2/CO ratios) on the performance of the methanation reaction by equilibrium model calculations and dynamic numerical model simulations. The performance of the methanation reaction was estimated from the CO conversion, CO to CH4 conversion, and CH4 mole fraction in the product gas. In general, a lower temperature and/or higher pressure are favorable for the enhancement of the methanation reaction performance. However, the performance becomes poor at low temperatures below 300 ℃ and high pressures above 15 atm because of limitations in the reaction kinetics. The smaller the amount of CO2 in the feed, the better the performance, and an additional H2 supply is essential to increase the methanation reaction performance fully.