The performance of a slurry bubble column reactor was evaluated for its application as a methanation reactor. The influences of the reactor pressure (5 to 20 bar), temperature (275 to 325 °C), gas velocity (0.8 to 1.6 cm/s), catalyst concentration (1.6 to 9 vol.%) as well as reactant partial pressures (H2/CO2 ratio from 3.8 to 6.3) on the reactor performance were assessed and optimal process conditions for substitute natural gas production were identified. An increase in pressure, temperature, and H2/CO2 ratio improves the reactor performance. The optimal catalyst concentration depends on the operating conditions. Under the experimental conditions of the work presented in this paper, a concentration of 6.5 vol.% led to the highest conversion rates. Additionally, the dynamic behavior of the three-phase methanation reactor was investigated using inlet gas velocity step changes to simulate load variation of a power-to-gas facility. The reactor showed rapid adaptation while maintaining an isothermal temperature profile.