Downhole wireline log (DWL) data was acquired from eight drill sites during China's first gas hydrate drilling expedition (GMGS-1) in 2007. Initial analyses of the acquired well log data suggested that there were no significant gas hydrate occurrences at Site SH4. However, the re-examination of the DWL data from Site SH4 indicated that there are two intervals of high resistivity, which could be indicative of gas hydrate. One interval of high resistivity at depth of 171–175 m below seafloor (mbsf) is associated with a high compressional- wave (P-wave) velocities and low gamma ray log values, which suggests the presence of gas hydrate in a potentially sand-rich (low clay content) sedimentary section. The second high resistivity interval at depth of 175–180 mbsf is associated with low P-wave velocities and low gamma values, which suggests the presence of free gas in a potentially sand-rich (low clay content) sedimentary section. Because the occurrence of free gas is much shallower than the expected from the regional depth of the bottom simulating reflector (BSR), the free gas could be from the dissociation of gas hydrate during drilling or there may be a local anomaly in the depth to the base of the gas hydrate stability zone. In order to determine whether the low P-wave velocity with high resistivity is caused by in-situ free gas or dissociated free gas from the gas hydrate, the surface seismic data were also used in this analysis. The log analysis incorporating the surface seismic data through the construction of synthetic seismograms using various models indicated the presence of free gas directly in contact with an overlying gas hydrate-bearing section. The occurrence of the anomalous base of gas hydrate stability at Site SH4 could be caused by a local heat flow conditions. This paper documents the first observation of gas hydrate in what is believed to be a sand-rich sediment in Shenhu area of the South China Sea.