A method for producing methane (69) from a carbonaceous (22) material includes conveying pulverized carbonaceous material (28) entrained in an inert carrier fluid, such as carbon dioxide (36), into a reactor (34). The reactor (34) includes a vortex region (72) for receiving hydrogen gas (38) and imparting a swirling motion to the hydrogen gas (38). The pulverized carbonaceous material (28) is exposed to the swirling stream of hydrogen gas (38) in a first reaction zone (114) within the reactor (34) to form an exit gas (40) that includes methane (69). Remaining unreacted carbonaceous material (28) is further exposed to the hydrogen gas (38) in a second, low velocity, reaction zone (120). The methane rich exit gas (40) is subsequently extracted from the reactor (34) for further processing.