Numerical simulations of gas-liquid two-phase flow with high superficial velocity in a vertical pipe were conducted with the use of the commercial software package STAR-CD 3.27. The change in bubble size due to breakup and coalescence was modelled by the Sγ model. The applicability and performance of the Sγ model in modelling of gas-liquid bubbly flow were studied. The sensitivity of the Sγ model to the distribution moment γ, and the drainage mode were investigated. The numerical results were compared with the experimental data of Hibiki et al., (2001). Good agreement was achieved for axial velocities and void fraction for all tested cases. It was found in this work that the Sγ model is capable of predicting with reasonable accuracy the bubble size and its distribution even in high void fraction. Except in the near wall region, the simulated bubble size and therefore the interfacial area density fit well with the experiment measurements. It was observed that the predicted bubble size and interfacial area density obtained from both the S0 and S2 models are more or less the same, indicating that the numerical results are independent of the distribution moment γ. It was further found that, the drainage mode greatly affects the bubble size: an increase in mobility of the bubble surface enhances the coalescence and leads to an over-prediction of the bubble size in the pipe centre. The bubble size increases with the increase of the gas phase superficial velocity while the variation of the interfacial area density is smaller as it is a combined function of the bubble size and local gas hold-up.