The largest amount of methane gas is trapped in less conventional natural gas resources, such as methane hydrates. It is estimated that these reserves of methane gas, in the form of hydrates, are larger than all of the conventional resources of methane gas combined. [U.S. Energy Information Administration (ETA), Independent Statistics and Analysis, Potential of Gas Hydrates Is Great, but Practical Development Is Far off, http://www.eia.gov/todayinenergy/detail.cfm?id=8690]. Methane extraction from hydrates can be coupled with carbon dioxide sequestration to make this process carbon-neutral. A large-scale laboratory reactor is used to simulate the conditions existing in permafrost hydrate sediments to study the hydrate formation and dissociation processes. The dissociation process occurs via a cartridge heat source (to simulate the down-hole combustion) and carbon dioxide injection, to study the CO2 sequestration behavior. The hydrate sediment studied was formed with 50% saturation of hydrate by pore volume and the dissociation of this sediment was done using different combinations of high and low heating rates (100 W and 20 W) and high and low CO2 injection rates (1000 and 155 mL/min). Two baseline tests were conducted without any addition of heat at CO2 injection rates of 155 and 1000 mL/min, for comparison. The results indicate that, at a constant heating rate, the number of moles of methane recovered decreases with an increasing flow rate of CO2 injection, whereas the number of moles of CO2 sequestered increases as the CO2 injection flow rate increases. At 50% initial hydrate saturation (SH) and a heating rate of 100 W, the number of moles of methane recovered decreased from 96 to 58 when the CO2 injection rate was increased from 155 mL/min to 1000 mL/min, respectively. Whereas, at 50% initial saturation and a heating rate of 100 W, the number of moles of CO2 sequestered increased from 13 to 40 when the CO2 injection rates were increased from 155 mL/min to 1000 mL/min. The recovery efficiency improved from 18% to 22% to 60% when the heating rate was increased from 0 to 20 W to 100 W, respectively, at 1000 mL/min CO2 injection.