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11/14/2006 15:15 FAX 2815444544 SHELL OIL LEGAL UNTM STATl3S DEPARTMENT OF THE DUMOR BUREAU of LAND MANACxEMENT COC 69166 OIL SHALE RESEARCH, bEVELOPMENT AND 9032/079 TION (R,D&zD) LEASE Part 1. Lease Rights Granted T? This lease is entered into on to be effective on by the STATES OF AMMCA (the "Lessor"), acting through the Bureau of Yvan Management (hereinafter called the "Bureau"), of the Department of the Interior (the "Department"), and Shell Frontier Oil and Gas, Inc. 777 Walker Street Two Shell Plaza, TSP 13153 Houston, Texas 77002 (the "Lessee"), pursuant and subject to the provisions of the Mineral Leasing Act of February 25. 1920 as amended (30 U.S.C. 181-287), hereinafter called the "Act", more specifically section 21 of the Act (30 U.S.C. 241), and to the terms, conditions, and requirements (1) of all applicable re ations promulgated by the Secretary of the Interior (the "Secretary" including revisions thereof hereafter promulgated by the Secretary (and not inconsistent with any specific provisions of this lease), all of whir shall be., upon their effective date, incorporated in and, by reference, made a part of this lease for mining open iflons. To the extent the provisions of this lease are inconsistent with the requirements of any regulation or ord , the lease terms govern- Part 2. Terms and Conditions Section 1. Definitions T. 2 S., R. 98 W., 6t' P.M. Sec. 4, Lots 9, 0, 15, and 16. As used in this lease: (a) "Authorized Officer" =Weans any employee of the Bureau of Land Management delegated the authority to perform the duty described in the section in which the term is used. -(b) "Commercial Quantities" means production of shale oil quantities in accordance with the approved Plan of Development for the proposed project through the research, development and demonstration activities conducted on the lease, that a reasonable expectation exists that the expanded operation would provide a positive return after all costs of production have been met, including the amortized costs of the capital investment. (c) "Leased Lands" means the lands described as' follows: Containing 149.9, more or less. (d) "Oil shale" sans a fine-grained sedimentary rock containing: (1) organic matter which was derived chiefly from aq tic organisms or waxy spores or pollen grains, w 'ch is only slightly soluble in ordinary petrole solvents, and of which a large proportion is dis tillable into synthetic petroleum, and (2) inorganic ma tter, which may contain other minerals. This is applicable to any argillaceous, carbonate, or sili ceous sedimentary rock which, through destruc ve distillation, will yield synthetic petroleum. (e) "Preference lease area" means the area reserved for leasing durin g the term of this lease to which Lessee may e a preference lease right The