Synthetic natural gas (SNG) is suggested as an important future energy carrier. The conventional route for SNG production is based on gasification of biomass to synthetic gas and the subsequent methanation of synthetic gas to SNG. This study is aimed to analyze the process units using the concept of exergy. Exergy analysis is a promising method, based on the 2nd law of thermodynamics, to analyze and improve chemical processes. In this work a detailed exergy analysis is performed for the SNG process based on woody biomass gasification. The main elements of the system are gasifier, gas cleaning, synthetic gas compression, methanation and final SNG condition. The above-mentioned process was simulated with a computer model using the flow-sheeting program Aspen Plus. Optimal values of the process conditions, particularly for the methanation reactors, are found. The internal exergy losses of different system units are evaluated. The largest internal exergy losses take place in the gasifier, methanation section and CO2 capture unit. The highest overall exergetic efficiency of 72.6% was found applying the following operating conditions: gasifier 700 °C and 1 bar; 1st methanation reactor 580 °C and 2nd methanation reactor 405 °C. © 2009 The Royal Society of Chemistry.