Natural Gas Lease Agreement

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EXHIBIT 10.6

OIL, GAS AND COALBED METHANE GAS LEASE

This agreement (this "Lease") is made as of the 3rd day of April, 2001

(the "Lease Date") by and among AFC Coal Properties, Inc., an Ohio corporation,

whose address is 580 Walnut Street, 9th Floor, Cincinnati, Ohio 45202, and

American Premier Underwriters, Inc., a Pennsylvania corporation, whose address

is 580 Walnut Street, 9th Floor, Cincinnati, Ohio 45202 (collectively,

"Lessor"), and Methane Management, Inc., an Ohio corporation, whose address is

33255 Bainbridge Road, Solon, Ohio 44139, and BPI Industries (USA), Inc., a

Nevada corporation whose address is 470 Granville Street, Suite 630, Vancouver,

British Columbia, V6C 1V5 CANADA (collectively, "Lessee").

WITNESSETH:

1. GRANTING CLAUSE AND RESERVATION.

(a) Lessor, in consideration of the royalties described below of which,

Two Hundred Seventy-Five Thousand Dollars ($275,000), shall be paid

by Lessee to Lessor concurrent with the signing of this Lease and

the covenants and agreements of Lessee hereinafter contained, does

hereby grant, lease and let exclusively unto Lessee any and all

rights Lessor owns in Williamson, Saline and Franklin Counties, in

the State of Illinois, either now known and described in Exhibit A

or determined in the future, related to oil, gas, coalbed methane

gas, methane gas and other hydrocarbons other than coal ("Covered

Hydrocarbons") below the surface to the base of the Pre-Mt. Simon

sandstone or their stratigraphic equivalents (the "Depth")

underlying the tracts of land described in Exhibit A attached

hereto, and subject to the terms contained herein the surface of any

tracts of land described in Exhibit A hereto which are owned by

Lessor solely for the purpose and with the exclusive right of

exploring, drilling, and operating for producing and owning Covered

Hydrocarbons together with the right to conduct exploration,

geologic and geophysical surveys by seismograph, core test, gravity

and magnetic methods, laying pipelines, building roads, tanks, power

stations, telephone lines, treat, transport and own said products,

and housing its other appurtenant easements and right-of-way Lessor

may hold to the surface. The use of the surface shall be subject to

rules prescribed by Lessor. The land described in Exhibit A attached

hereto, all of which is located in Williamson, Saline and Franklin

Counties in the State of Illinois, is hereinafter referred to as the

"Land".

(b) Lessor excepts from the terms of this Lease and expressly reserves

unto itself, its successors and assigns the following:

(i) Any right to explore for, mine, operate, produce, remove or

market any hard mineral or hard mineral substance including

but not limited to coal, uranium, and oil shale or their

constituent products, or any of them from the Land;

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(ii) Any right to use the Land for the underground storage of oil,

gases, liquid hydrocarbons or associated products; and

(iii) All other rights not specifically granted by the provisions of

this Lease.

(c) Notwithstanding anything to the contrary contained herein, this

Lease shall not be effective until Lessee has delivered to Lessor a

duly executed general release in form and substance satisfactory to

Lessor from Robert S. Wheat, Sr., Clyde House, Mid-Continent

Methane, Inc., Harrison & Moberly, and any of their affiliates

(collectively, the "Mid-Continent Parties").

2. TERM. This Lease shall remain in force as to the Land for a term of

five (5) years from the Lease Date (the "Primary Term" of this Lease) and as to

a particular tract (as described in Section 6 below) so long thereafter as

Covered Hydrocarbons are being produced from such tract providing a royalty

payment of not less than One Dollar ($1.00) per acre in such tract per calendar

month; provided, however, after the Primary Term, in the event the aggregate

royalties do not exceed Forty-Two Thousand Dollars ($42,000.00) in any month,

this Lease shall terminate.

3. SHUT-IN ROYALTY. During any period (whether before or after the

expiration of the Primary Term hereof) after Covered Hydrocarbons have been

produced, when Covered Hydrocarbons are not being sold or used, and the well or

wells are shut-in and there is no current production of Covered Hydrocarbons to

keep this Lease in force as to such tract, Lessee shall pay or tender a royalty

of One Thousand Dollars ($1,000) per well payable within one hundred and eighty

(180) days of the date such wells are shut-in, and by the payment, Lessee may

extend the term of this Lease as to such tract for a period of one (1) year

commencing from the date the well is shut in. When such payment is made it will

be considered that oil, gas or coalbed methane gas is being produced within the

meaning of this Lease. For the purpose of this Section, no well shall be

considered shut-in unless (a) it is completed and tested and thereby shown to be

capable of producing Covered Hydrocarbons and (b) the results of such tests have

been delivered to Lessor.

4. LESSOR'S ROYALTY.

(a) As consideration of the premises, Lessor hereby reserves, and Lessee

hereby covenants and agrees to pay Lessor, a royalty of fifteen

percent (15%) on, and payable solely out of, gross proceeds from the

sale of Covered Hydrocarbons as measured at the sales meter from all

wells and shall be free and clear of all operating costs and

expenses, provided no royalty shall be due during the first eighteen

(18) months from the Lease Date unless and until the royalty which

otherwise would have been due during such period would have been Two

Hundred Seventy-five Thousand Dollars ($275,000.00). With respect to

Covered Hydrocarbons used as allowed under this Lease under Section

22 or by Lessee in its operations, the royalty shall be based on the

wellhead price at the time of production for the Covered

Hydrocarbons so used.

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(b) Production royalties shall be paid monthly to Lessor's address set

forth in Section 19 within forty-five (45) days after oil, gas or

coalbed methane is measured for sale or delivery to a third party.

Pursuant to pre-arranged division orders, royalties may be paid by

the pipeline company or end users; provided, however, Lessee shall

remain principally responsible for the timely payment of all

royalties. If Lessee shall not timely pay Lessor any sum of money

payable under the provisions of this Lease and such non-payment

shall continue for a period of thirty (30) days, Lessee shall, in

addition to such payment, pay Lessor interest on the delinquent

amount, at the prime rate floating as disclosed from time to time in

The Wall Street Journal plus five percent (5%), calculated from the

time of such default. This provision shall in no way constitute a

waiver of the requirement to pay on time and shall be cumulative and

in addition to Lessor's rights either in law or in equity.

5. DRILLING, DEVELOPMENT AND OPERATIONS.

(a) Prior to drilling any well, Lessee shall provide Lessor with written

notice of the location and such other information requested by

Lessor. Lessee shall promptly commence and continuously prosecute

production testing, drilling or reworking operations as a reasonable

and prudent operator would and in a good and workmanlike manner. If

a well is drilled which is capable of producing Covered Hydrocarbons

in quantities that are economically feasible, Lessee shall

diligently develop the well and market production therefrom as soon

as possible.

(b) All operations conducted by Lessee under this Lease shall be

conducted at Lessee's sole cost and risk, and subject to the

indemnity provisions of Section 16 below. Lessor shall have no

responsibility for and no right to control or direct Lessee's

performance under this Lease, except to advise Lessee of its failure

to comply with the terms of this Lease. Subject to Section 18 below

and without limiting of the generality of the immediately preceding

sentence, Lessor and Lessee acknowledge that Lessor has no right or

power to participate in the selection of a drilling contractor, to

propose the drilling of a well, to determine the timing or sequence

of drilling operations, to commence or shut down production, to take

over operations, or to share in any operating decision whatsoever.

Lessor and Lessee hereby expressly negate any intent to create (and

this Lease shall never be construed as creating) a mining or other

partnership or joint venture. No party shall have the authority to

bind the other party for any obligation or otherwise act as an

employee or agent of the other party for any purpose whatsoever.

(c) Lessee shall use its best efforts, in accordance with all Laws and

good industry practice, to complete the wells as producers of

coalbed methane in paying quantities. Lessee shall conduct such

coring, logging, testing, fracing and acidizing operations as a

prudent operator would conduct under the same or similar

circumstances. If a well cannot reasonably be completed as a

producer of Covered Hydrocarbons within the Depth, Lessee shall

promptly plug the well and perform all necessary surface restoration

work. Lessee shall not engage in the so-

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called underground gassification method of producing gas or coalbed

methane; provided, however, Lessee may use nitrogen for fracing

purposes and may use other stimulation processes subject to Lessor's

prior written approval. Lessee shall have the right to flare coalbed

methane during testing and prior to installation in accordance with

all Laws (as defined below). Lessee shall utilize only those methods

or practices which avoid creating a roof or coal structure that

would adversely affect existing or potential mining operations in

the Springfield No. 5 or Herrin No. 6 coal seams.

6. TERMINATION AS TO NON-PRODUCING ACREAGE AND UNDRILLED FORMATIONS (PUGH

CLAUSE). At the expiration of the Primary Term, this Lease shall terminate as to

each tract (except as to tracts with shut-in wells as provided in Section 3)

which is not producing royalties as required in Section 2(a), and shall

terminate as to all the Land as to all depths below one hundred (100) feet below

the stratigraphic equivalent of the deepest depth drilled by Lessee on the Land.

For the purpose of this Section, a well primarily productive of oil shall hold

this Lease only as to the eighty (80) acres upon which it is located with the

well located in the center thereof, and a well which is primarily productive or

capable of producing gas, coalbed methane gas or methane gas shall hold this

Lease only as to the three hundred twenty (320) acres on which it is located

with the applicable well located in the center thereof; and further provided

that a well drilled into abandoned mineworks shall hold all areas in such

mineworks that are drained by such well; provided further, however, if Lessee

has exercised its rights under Section 7, the area held by a well shall be

increased to the portion of the Land covered in the corresponding unit. At the

expiration of the Primary Term, Lessee will deliver to Lessor, in recordable

form, such releases as are necessary to evidence the expiration of this Lease as

to the tracts which this Lease no longer covers.

7. POOLING; UNITIZATION. Lessor grants Lessee the right to form a drilling

unit or units to conform to regular or special spacing rules issued by any

governmental authority having control of such matters, to conform to conditions

imposed upon the issuance of drilling permits, or to promote the conservation of

oil or gas or for the storage of gas or for the injection of air, gas, water,

brine and other fluids. Lessee shall have the right, at its option to pool, or

combine the leased premises or any portion thereof, with other land, lease or

leases in the immediate vicinity thereof, at a time before or after drilling

whether such land, lease or leases are hold by Lessee or by others. Lessee shall

have the right to, re-pool, reform, enlarge and/or reduce or in any other manner

modify or change the pooled unit in order to protect the correlative rights of

the parties or to promote conservation of oil and gas. Such units shall not

substantially exceed one hundred sixty (160) acres with respect to any zone or

stratum predominantly oil-bearing, and not substantially exceed six hundred

forty (640) acres with the respect to any zone or stratum predominately

gas-bearing, or condensate bearing. The entire acreage pooled or unitized shall

be treated for the purpose, except for the payment of royalties on production,

as if it were included in this Lease. In lieu of the royalties elsewhere herein

specified, Lessor shall receive, on the production from any unit so pooled, only

such proportion of the royalties stipulated herein as the amount of its acreage

placed in the unit bears to the total acreage so pooled in the particular unit

involved. Notwithstanding anything to the contrary in this Lease, the

commencement of operations for the drilling of a well on any such drilling unit,

whether such drilling or other operations are on the Land and regardless of

whether such operations were commenced before or after the execution of this

Lease or any pooling or

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unitization, shall have the same force and effect in all respects as the

commencement of operations for the drilling of a well on the Land hereby; and

drilling, reworking or other operations conducted on any such drilling unit or

production of oil or gas anywhere from such drilling unit, whether such

drilling, reworking or other operations are on, or such production is from the

Land and regardless of whether such operations were commenced before or after

the execution of this Lease of any pooling or unitization, shall have the same

force and effect as drilling, reworking or other operations conducted on or

production obtained from the Land as to the continuance and/or extension of the

term of this Lease. Lessor agrees to execute any and all documents Lessee

reasonably deems necessary, desirable or convenient for any pooling or

unitization under the terms of this Lease.

8. AUDITS; INSPECTION; INFORMATION.

(a) Lessee shall keep full and accurate records relating to the

production of oil, gas and coalbed methane, and shall quarterly

deliver to Lessor a written report describing and identifying, in

such detail as Lessor may reasonably request the quantities and

qualities of Covered Hydrocarbons produced and/or sold during the

previous calendar quarter. Lessee and Lessee's buyers or

transporters shall measure all production accurately using standards

established by the American Gas Association (AGA) and/or the

American Petroleum Institute (API) and all measuring devices shall

be tamper proof as nearly as practicable. Lessee, shall provide

promptly to Lessor upon request, copies of written results of all

measurements, tests and sampling (including those performed by

Lessee's buyers or transporters, but only if available to Lessee).

Lessee shall maintain and keep available for Lessor's inspection

upon required notice, copies of all contracts or documents, as well

as all subsequent amendments and other addendums thereto, under

which oil, gas and coalbed methane are marketed, processed,

transported or otherwise disposed of. Lessee shall furnish Lessor

quarterly copies of all purchase or run tickets and other reports

and statements of purchases, gatherers, transporters, or processors

respecting the marketing, gathering, transportation, processing or

other disposition of Covered Hydrocarbons.

(b) Upon three (3) days' written notice to Lessee, Lessor may audit

Lessee's books and records but only as they relate to production,

Covered Hydrocarbons marketed and sold or transferred to surface

owners, or royalty payments. Such audit rights maybe exercised

anytime while royalties are payable and for a period of twenty-four

(24) months thereafter. In the event access to Lessee's books and

records is not provided within three (3) days of the written notice

required in the first sentence, Lessee shall pay Lessor Ten Thousand

Dollars ($10,000,00) for each additional day or portion thereof

access is denied or not provided. In the event an audit determines

an underpayment by Lessee, Lessee shall pay on demand to Lessor all

amounts (plus interest) due and the cost of such audit.

(c) At reasonable times on reasonable notice to Lessee, Lessor shall

have the right, at Lessor's expense, to:

(i) Inspect by all appropriate means Lessee's facilities on the

Land;

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(ii) Test Lessee's meters and other measuring and testing devices;

(iii) Sample, test, measure and gauge production of the wells,

including the right, but not the obligation, to install meters

on lines;

(iv) Observe Lessee in the performance of Lessee's obligations

under this Lease; and

(v) Examine or audit, during the term of this Lease and three (3)

years thereafter, the books, records, supporting documents,

files, and correspondence of Lessee and Lessee's buyers in

connection with the Lease and the production and/or sale of

Covered Hydrocarbons from the Land.

(d) In the event access is not provided, Lessee shall pay Lessor Ten

Thousand Dollars ($10,000.00) for each additional twenty-four (24)

hour period or portion thereof access is denied.

(e) Upon Lessor's written request, to the extent in Lessee's possession,

Lessee shall provide Lessor with a written inventory of all wells

(collectively, the "Prior Wells") drilled on the Land since May 25,

1994, and such other information regarding the Prior Wells as Lessor

may request.

9. TITLE. Lessor makes no covenant to Lessee for quiet enjoyment of the

Land. Furthermore, Lessor does not warrant title, either express or implied, to

the Land. Lessor shall not have any liability to Lessee with respect to any

defect in title. Lessor has made or will make available to Lessee for inspection

or copying at Lessee's expense any title information (such as coal leases or

agreements, contracts, deeds, easements or rights-of-way) in its possession, if

any, with respect to the Land. In receiving any information from Lessor, Lessee

will keep such information confidential and will not use such information, or

copy, distribute or disclose such information to anyone, for any purpose other

than directly relating to this Lease.

10. COAL MINING OPERATIONS. Lessee acknowledges that the coal and other

hard minerals located in and under the Land, and the rights to mine and remove

the same, are of great value and importance to Lessor and its lessees ("Mineral

Tenants"). The right to mine and remove said coal and other hard minerals,

whether by underground methods, surface-mining methods or any other method,

shall be paramount to all rights granted to Lessee hereunder. There are excepted

from the Land and the Depth and from the mining and appurtenant rights, waivers

and immunities granted to Lessee hereunder, and hereby reserved to Lessor, the

right to drill and maintain openings through the Land and the Depth for purposes

of exploring for, developing, working, mining, removing, shipping and

transporting any and all coal, clay and other hard minerals under and within the

Land. Lessee will not violate any provisions of any coal leases that Lessor may

execute in the future concerning the Land, copies of which will be furnished to

Lessee. Lessee shall: (a) not commence any operation or install any facility

which would constitute a present interference with any mining operations in or

under the Land; (b) not commence any operation or install any facility without

giving the Mineral Tenant under such leases at least forty-five (45) days prior

written notice thereof and at least ten (10) days prior

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written notice of any application or filing with any state, Federal or local

government authority for any permit or other authorization required for such

operation or facility; and (c) within sixty (60) days after receiving notice

from a Mineral Tenant under such leases that any operation being conducted or

facility being maintained by Lessee has or within ninety (90) days will become

an interference with the coal mining operations of a Mineral Tenant under such

leases, Lessee shall, at Lessee's expense, take such steps as may be required to

eliminate or prevent such interference, including, without limitation, ceasing

such operation or removing or modifying such facility (and structures, equipment

or personalty used therein) for the period of time necessary to permit a Mineral

Tenant under such leases or other person or entity to complete the mining

operations subject to such interference. Upon transfer by Lessor of any such

reserved rights, Lessee shall expressly assume the obligations of Lessor

contemplated in this Section. Because full extraction mining (e.g. longwall) may

be used and subsidence may result, Lessee agrees that all surface facilities

(including pipelines) will either be designed to withstand the effects of

subsidence or will be removed prior to mining. In any event, neither Lessor nor

Mineral Tenant will be liable for damage.

Lessee further agrees that:

(i) Lessor shall be notified of any proposed well location, and if

Lessor is the surface owner, Lessor shall have the right to

approve any roads, equipment and facility locations, pipelines

and all other improvement required by Lessee hereunder;

(ii) Lessee shall use its best efforts to drill holes and maintain

wells as close to the vertical as possible and shall furnish

Lessor with information (including, without limitation,

downhole surveys) concerning the locations of all holes in the

Herrin No. 6 coal seam and the unmined portions of the

Springfield No. 5 coal seam and all holes on the adjacent Land

and adjace