A 2D model and heat transfer mechanism are proposed to analyze and study oxidative steam reforming of methane (OSRM) in a membrane reactor. The model describes mass and thermal dispersions for gas and solid phases. It also accounts for transport through the membrane. The effects of operating parameters on methane conversion and H2 yield are analyzed. The parameters considered are the bed temperature (800–1100 K), molar oxygen-to-carbon ratio (0.0–0.5), and steam-to-carbon ratio (1–4). The results show that our model prevents overestimation and provides valuable additional information about temperature and concentration gradients in membrane reactor which is not available in a simple one-dimensional approach. Simulation results show that large temperature and concentration gradients cannot be avoided. The particle properties and the bed diameter have a considerable effect on the extent of gas mixing. Effective gas mixing coefficient also increases with increasing gas and solid velocity. In membrane reactor, simulation results show that mixing which depends on operational and design parameters has a strong effect on the hydrogen conversion. Also, the removal of hydrogen with membranes breaks equilibrium barrier leading to efficient production of hydrogen, reduced reactor size, and tube lengths. The model can be used in real-time simulation of industrial reactors for control and optimization purposes.