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To cut CO₂emissions, we propose to directly convert shale gas into value-added products with a new H₂/O₂co-transport membrane (HOTM) reactor. A Multiphysics model has been built to simulate the membrane and the catalytic bed with parameters obtained from experimental validation. The model was used to compare C2 yield and CH₄conversion rate between the membrane reactor and the state-of-the-art fixed-bed reactor with the same dimensions and operating conditions. The results indicate that (1) the membrane reactor is more efficient in consuming CH₄for a given amount of fed O₂. (2) The C2 selectivity of the membrane reactor is higher due to the gradual addition of O₂into the reactor. (3) The current proposed membrane reactor can have a decent proton molar flux density but most of the proton molar flux will contribute to producing H₂O on the feed side under the current operating conditions. The paper for the first-time projects the performance of the membrane reactor for combined H₂O/H₂removal and C2 production. It could be used as important guidance for experimentalists to design next generation natural gas conversion reactors.