Hydrogen production and carbon formation during the steam reforming of heptane over nickel-based catalyst are investigated in a circulating fluidized bed membrane reformer (CFBMR) at 723-823 K and 101.3-2026 kPa. A random carbon deposition and catalyst deactivation model is developed to account for the effect of carbon deposition on the overall reforming kinetics. The results show that the deposited carbon can be efficiently gasified by steam, hydrogen, carbon dioxide, or oxygen in this novel CFBMR, making carbon-free operation practically possible, especially when steam to carbon feed ratio is higher than 2.5 mol/mol. The use of hydrogen permselective membranes breaks the equilibrium barriers associated with the reversible reforming reactions and increases the hydrogen yield significantly. The introduction of oxygen into the adiabatic reformer can efficiently supply the heat necessary for the endothermic steam reforming through the exothermic oxidation, making an autothermal condition possible for the efficient production of hydrogen.