Recent gas production tests at the Nankai Trough in Japan show that sand production issue caused premature termination of the gas production test [6], [11].Earlier attempts to investigate well integrity in methane hydrate-bearing formation were documented in Freij-Ayoub et al. [12], [13] where they assessed well integrity during heating-induced hydrate dissociation. However, well integrity during reservoir compaction, which might be the cause of the well failure/sand production at the Nankai Trough, was not assessed in their study. Subsequently, well integrity in methane hydrate reservoirs during reservoir compaction was investigated by several researchers ([14], [8], [15] and [9]).Rutqvist et al. [14] showed that the gap between the casing and formation, which developed during well construction (e.g., poor cement job) would adversely affect formation integrity around a horizontal well during gas production. Their work indicates the importance of simulating the well construction processes for the assessment of wellbore integrity during gas production. Qiu et al. [8] simulated 20-day gas production at the Nankai Trough and showed that the casing, cement and screen could accumulate approximately 1% of plastic strain, which they argue would be negligibly small to cause well ' . The effect of different initial horizontal effective stress distributions is investigated in Section 3.5.