In hydrate-bearing sediments, the velocity and attenuation of compressional and shear waves depend primarily on the spatial distribution of hydrates in the pore space of the subsurface lithologies. Recent characterizations of gas hydrate accumulations based on seismic velocity and attenuation generally assume homogeneous sedimentary layers and neglect effects from large- and small-scale heterogeneities of hydrate-bearing sediments. We present an algorithm, based on stochastic medium theory, to construct heterogeneous multivariable models that mimic heterogeneities of hydrate-bearing sediments at the level of detail provided by borehole logging data. Using this algorithm, we model some key petrophysical properties of gas hydrates within heterogeneous sediments near the Mallik well site, Northwest Territories, Canada. The modeled density, and P and S wave velocities used in combination with a modified Biot-Gassmann theory provide a first-order estimate of the in situ volume of gas hydrate near the Mallik 5L-38 borehole. Our results suggest a range of 528 to 768 × 10⁶ m³/km² of natural gas trapped within hydrates, nearly an order of magnitude lower than earlier estimates which did not include effects of small-scale heterogeneities. Further, the petrophysical models are combined with a 3-D finite difference modeling algorithm to study seismic attenuation due to scattering and leaky mode propagation. Simulations of a near-offset vertical seismic profile and cross-borehole numerical surveys demonstrate that attenuation of seismic energy may not be directly related to the intrinsic attenuation of hydrate-bearing sediments but, instead, may be largely attributed to scattering from small-scale heterogeneities and highly attenuate leaky mode propagation of seismic waves through larger-scale heterogeneities in sediments.