Gas hydrates as a significant resource of natural gas have attracted considerable attention in recent years. However, the severe environmental conditions of gas hydrate reservoirs and the solid form of hydrates require extensive technological development before commercial gas production becomes possible. Numerical studies often give useful information for predicting the potential and technical viability of a recovery process. This paper presents a 2D cylindrical simulator for gas production from hydrate reservoirs. The model includes the equations for gas-water two-phase flow, conductive and convective heat transfer, and intrinsic kinetics of hydrate decomposition. The simulator is used to model a hydrate reservoir where the hydrate-bearing layer overlies a free gas zone, such as those discovered in the arctic. A well is drilled and completed in the free gas zone. Pressure reduction in the free gas zone leads to the decomposition of the overlying hydrate and subsequent production of the generated gas. In this paper, we study the impact of the overlying hydrate in improving the production performance of the underlying gas reservoir and investigate the effect of various parameters on gas production behaviour. The rate of gas generated and produced, pressure, temperature, and saturation distributions are studied to investigate the sensitivity of results on individual input parameters. The results suggest that the development of gas reservoirs with overlying hydrates can lead to significant production, rates and that the top hydrates have a large impact on increasing the reserve and improving the productivity of the underlying gas reservoir.