Abstract:The South China Sea hosts abundant gas hydrate resources, often accompanied by significant amounts of free gas deposits distributed around or beneath the hydrate reservoir. However, most discovered hydrate reservoirs in this region have high mud content and low permeability, posing a challenge to effective pressure drop transfer during depressurization and leading to substantial productivity constraints. For example, the production capacity in the Shenhu area does not meet commercial development standards. As a result, there is a growing consideration towards combined production of hydrate gas and associated free gas. While expanding the drainage area of both hydrate and free gas reservoirs is crucial, the key to unlocking their full production potential lies in exploring efficient enhancement methods. Formation sealing, an effective technique for improving pressure drop transfer, can facilitate hydrate dissociation and enhance free gas recovery, showing promising prospects for application. This paper leverages geological data from the first gas hydrate trial production test in the South China Sea to establish a three- dimensional heterogeneous production model. The study focuses on evaluating the co- extraction potential of hydrate and free gas through horizontal wells and formation sealing. It systematically examines the effects of sealed layer radius and thickness, permeability ratio, and horizontal well length. Additionally, the maximum percentage of gas contribution from hydrate dissociation (w) during co- extraction is calculated. Simulation results demonstrate that incorporating formation sealing with horizontal wells significantly enhances production potential. The relative impact of the investigated parameters on production capacity follows a descending order: horizontal well length, sealed layer radius, and permeability ratio. An interactive effect is observed between horizontal well length and sealed layer diameter. Free gas serves as the primary source of gas trapped in the entire co- production process, and deploying horizontal well in the free gas sediments can further increase production potential after formation sealing in burdens compared to well deployment in the three- phase formation. This research offers valuable insights for enhancing production potential and promoting the industrialization of gas hydrates.