Exhibit 10(b)(1)

                              EMPLOYMENT AGREEMENT
                              --------------------

     This Employment Agreement is entered into as of the 1st day of July, 2001,
by and between Gateway Energy Corporation, a Delaware corporation, with its
principal place of business at 500 Dallas Street, Suite 2615, Houston, Texas
77002 (hereinafter the "Company"), subject to the further definition set forth
in Section 7.1, and Robert Panico, whose address is 46 Cedar Lawn Circle,
Galveston, Texas 77551 (hereinafter "Executive").

     WHEREAS, the Company considers the establishment and maintenance of a sound
and vital management to be essential to protecting and enhancing the best
interests of the Company and its shareholders; and

     WHEREAS, the Board of Directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including
Executive, to their assigned duties without distraction.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties set forth herein, and for other good and valuable consideration, the
parties agree as follows:

     Section 1. Employment.
                -----------

     The Company and Executive agree that Executive shall serve as Vice
President of Gateway Offshore Pipeline Company. Executive shall perform such
duties and exercise such powers pertaining to the management and operations of
the Company as may be determined from time to time by the Company. Such duties
and powers shall be consistent with those normally expected of persons holding
similar positions. Executive's duties, however, are subject to reasonable
modifications based on future developments in the Company's business.

     Section 2. Term of Agreement.
                ------------------

     This Agreement will be effective as of July 1, 2001, and, except as
otherwise provided in this Agreement, will continue in effect until October 31,
2004 and shall be renewable for additional one (1) year terms at the option of
the Company. If either party chooses not to renew this Agreement for a
successive one year term, the party making that choice must provide the other
party with notice of the intent not to renew at least 180 days prior to the
expiration of the then current term. If a Change in Control occurs prior to the
expiration of the initial term of this Agreement, this Agreement will continue
in effect for three (3) years from the Change in Control. If a Change in Control
occurs during a one (1) year renewal term, this Agreement will continue in
effect for one (1) year from the Change in Control. Executive's base salary

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while employed will be determined from year to year in accordance with the
Company's Middle Management Compensation Plan (the "Plan"), but shall be no less
than $120,000 annually.

     Section 3. Change in (Control.
                -------------------

     The Company recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control exists, and that
possibility, along with the uncertainty and questions which may arise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. In order to induce(,)
Executive to remain in its employ, the Company agrees to provide Executive the
payments and benefits described in this Agreement if Executive's employment with
the Company is terminated subsequent to a "Change in Control" of the Company as
defined in Section 4, under the circumstances described in Section 5.

     Section 4. Definition of Change in Control.
                --------------------------------

     For purposes of this Agreement, a Change in Control of the Company means
the occurrence of any of the following events during the period in which this
Agreement remains in effect. A Change in Control will be deemed to occur on the
date the event occurs:

     4.1  Change in Voting Power. Any person or persons acting together which
          would constitute a "group" for purposes of Section 13(d) of the
          Exchange Act (other than the Company, or any Subsidiary, or any entity
          beneficially owned by any of the foregoing) beneficially own (as
          defined in Rule 13(d)-3 under the Exchange Act) without Board approval
          or consent, directly or indirectly, at least thirty percent (30%) of
          the total voting power of the Company entitled to vote generally in
          the election of the Board;

     4.2  Change in Board of Directors. Either:
          -----------------------------

          (a)  the Current Directors (as hereinafter defined) cease for any
               reason to constitute at least a majority of the members of the
               Board (for these purposes, a "Current Director" means any member
               of the Board as of the date of this Agreement, and any successor
               of a Current Director whose election or nomination for election
               by the Company's stockholders was approved by at least a majority
               of the current Directors then on the Board); or

          (b)  at any meeting of the stockholders of the Company called for the
               purpose of electing directors, a majority of the persons
               nominated by the Board for election as directors fail to be
               elected; or

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     4.3  Liquidation, Merger or Consolidation. The stockholders of the Company
          approve:

          (b)  an agreement providing for the merger or consolidation of the
               Company (i) in which the Company is not the continuing or
               surviving corporation (other than consolidation or merger with a
               wholly owned subsidiary of the Company in which all shares
               outstanding immediately prior to the effectiveness thereof are
               changed into or exchanged for the same consideration) or (ii)
               pursuant to which the shares are converted into cash, securities
               or other property, except a consolidation or merger of the
               Company in which the holders of the shares immediately prior to
               the consolidation or merger have, directly or indirectly, at
               least a majority of the common stock of the continuing or
               surviving corporation immediately after such consolidation or
               merger, or in which the Board immediately prior to the merger or
               consolidation would, immediately after the merger or
               consolidation, constitute a majority of the board of directors of
               the continuing or surviving corporation; or

     4.4  Sale of Assets. The stockholders of the Company approve an agreement
          (or agreements) providing for the sale or other disposition (in one
          transaction or a series of transactions) of all or substantially all
          of the assets of the Company.

          (a)  a plan of complete liquidation of the Company; or


     Section 5. Termination Following Change in Control.
                ----------------------------------------

     If any of the events described in Section 4 - constituting a Change in
Control occur, Executive will be entitled to the payments and benefits provided
for in Section 6 if a subsequent termination of Executive's employment occurs
within three (3) years from the date of that Change in Control, unless that
termination is:

          (a)  because of Executive's death;

          (b)  by the Company for Cause or Disability; or (c) by Executive other
               than for Good Reason.

Those payments and benefits will be in lieu of any severance payments Executive
would otherwise receive in accordance with Section 19 of this Agreement.

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     5.1  Cause. Termination by the Company of Executive's employment for
          "Cause" means Executive has materially breached this Agreement or has
          engaged in action or misconduct in connection with the performance of
          his duties that is injurious to the business of the Company, or is
          convicted of a felony or commits an act of gross, flagrant, and
          willful misconduct relating to his employment or the Company's
          business, including, but not limited to, theft or embezzlement of the
          Company's property or money, or an act of fraud against the Company.
          If Company believes Cause exists, as defined herein, a written notice
          will be delivered to Executive by the Chief Executive Officer of the
          Company (or if Executive is the Chief Executive Officer, the Chairman
          of the Compensation and Stock Option Committee) that specifically
          identifies the manner in which the Chief Executive Officer (or the
          Chairman of the Committee) believes that Executive has given the
          Company Cause for termination of Executive's employment, and giving
          Executive an opportunity for Executive, together with Executive's
          counsel, to be heard before the Board of Directors of the Company. The
          Board of Directors of the Company may then make a finding that, in the
          good faith opinion of two-thirds of the Board of Directors, Executive
          acted (or failed to act when he should have acted) in a manner
          constituting Cause as defined herein, and specifying the particulars
          of that finding in detail. For purposes of this subsection 5. 1, no
          act, or failure to act, on Executive's part will be considered
          "willful" unless done, or omitted to be done, by Executive not in good
          faith and without reasonable belief that Executive's action or
          omission was in the best interest of the Company.

     5.2  Disability. Termination by the Company of Executive's employment for
          "Disability" means termination of Executive's employment following and
          because of Executive's failure to perform substantially all of the
          material duties of his position for a period of at least one hundred
          eighty (180) consecutive calendar days due to physical or mental
          illness or injury. Executive will continue to receive Executive's full
          base salary at the rate in effect and any bonus payments under the
          Plan payable during the one hundred eighty (180) day qualification
          period until termination of Executive's employment for Disability.
          After that termination, Executive's benefit will be determined in
          accordance with the Company's other benefit plans and practices then
          in effect that apply to Executive. The Company will have no further
          obligation to Executive under this Agreement and all supplemental
          benefits will be terminated. If the Company and Executive disagree as
          to Executive's incapacity, each may appoint a medical doctor to
          certify his opinion as to Executive's incapacity, and if the doctors
          do not agree as to Executive's incapacity, then the two doctors will

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          appoint a third medical doctor to certify his opinion as to
          Executive's incapacity, and the decision of a majority of the three
          doctors will prevail. The Company will bear the costs of the doctors'
          opinions.

     5.3  Good Reason. Termination by Executive of Executive's employment for
          "Good Reason" means termination by Executive of Executive's employment
          based on:

          (a)  The assignment to Executive of duties inconsistent with his
               position and status with the Company as they existed immediately
               prior to a Change in Control, or a substantial change in
               Executive's title, offices or authority, or in the nature of his
               responsibilities, as they existed immediately prior to a Change
               in Control, except in connection with the termination of his
               employment for Cause or Disability or as a result of his death or
               by Executive other than for Good Reason;

          (b)  A reduction in Executive's base salary as in effect on the date
               of this Agreement or as his salary may be increased from time to
               time;

          (c)  A failure to continue the Company's Plan, as it may be modified
               from time to time, substantially in the form in effect
               immediately prior to a Change in Control, or a failure to
               continue Executive as a participant in the Plan on a basis
               substantially similar to his participation immediately prior to a
               Change in Control, or to pay Executive the amounts that Executive
               would be entitled to receive in accordance with the Plan;

               Requiring Executive to be based more than fifty (50) miles from
               the location where Executive is based immediately prior to a
               Change in Control, except for required travel on business to an
               extent substantially consistent with Executive's business travel
               obligations prior to the Change in Control, or if Executive is
               agreeable to relocating, then the Company agrees to reimburse
               Executive for all reasonable moving expenses incurred by
               Executive or to indemnify Executive against any loss realized in
               the sale of his principal residence in connection with that
               relocation;

          (e)  The failure to continue in effect any retirement plan, life
               insurance plan, medical insurance plan, disability plan or any
               other benefit plan in which Executive is participating
               immediately prior to a Change in Control (or provide plans
               providing Executive with substantially similar benefits), the
               taking of any action by the Company that would adversely affect

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               Executive's participation or materially reduce his benefits under
               any of those plans or deprive Executive of any material fringe
               benefit enjoyed by Executive immediately prior to a Change in
               Control; or

               The failure by the Company to obtain the assumption of this
               Agreement by any successor, as contemplated in Section 7.

     5.4  Notice of Termination. Any purported termination by the Company
          pursuant to subsections 5.1 or 5.2 or by Executive pursuant to
          subsection 5.3 will be communicated by written Notice of Termination
          to the other party. For purposes of this Agreement, a "Notice of
          Termination" means a notice that indicates the specific termination
          provision in this Agreement relied upon and setting forth in
          reasonable detail the facts and circumstances claimed to provide a
          basis for termination of Executive's employment under the provision so
          indicated. Any purported termination not effected pursuant to a Notice
          of Termination meeting the requirements set forth in this Agreement
          will not be effective.

     5.5  Date of Termination. For purposes of this Agreement, the date of the
          termination of Executive's employment ("Date of Termination") will be:

          (a)  if Executive's employment is terminated by his death, the end of
               the month in which his death occurs;

          (b)  if Executive's employment is terminated for Disability, thirty
               (30) days after Notice of Termination is given; or

          (c)  if Executive's employment is terminated by Executive or by the
               Company for any other reason, the date specified in the Notice of
               Termination.

     Section 6. Payments and Benefits Upon Certain Terminations Following a
                Change in Control.
                -----------------------------------------------------------

     If within three (3) years following the Change in Control, Executive's
employment is terminated other than for Death, Disability or Cause, or if
Executive terminates his employment for Good Reason, then the following
provisions will apply:

     6.1  Compensation Through Date of Termination. The Company will pay
          Executive within thirty (30) days after termination:

          (a)  Any unpaid amount of Executive's base salary through the Date of
               Termination;

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          (b)  With respect to any year then completed, any unpaid amount
               accrued to Executive pursuant to the Plan; and

          (c)  With respect to any year then partially completed, a pro rata
               portion through the Date of Termination of Executive's annual
               bonus under the Plan, based upon the amount of his bonus for the
               previous year.

     6.2  Additional Severance. In lieu of any further salary and bonus payments
          to Executive for periods subsequent to the Date of Termination, or
          other severance payments, the Company will pay as severance pay to
          Executive two times the- sum of:

          Executive's annual base salary as of the date of Change in Control, or
          as of the Date of Termination, whichever is greater; and

          Executive's annual bonus under the Plan. Executive's annual bonus
          amount is to be based on the greater of:

          (1)  the average of Executive's bonus for the two fiscal years of the
               Company preceding the year in which the Change in Control occurs;
               or

          (2)  the average of Executive's bonus for the two fiscal years of the
               Company preceding the year in which the termination of employment
               occurs.

          The severance pay provided for in this Section 6.2 shall be
          transferred to a "Rabbi Trust," effective as of the Date of
          Termination, and paid to Executive in twenty-four (24) equal monthly
          installments commencing on the first day of the next month following
          the Date of Termination, and on the first day of each subsequent
          month, until fully paid.

     6.3  Benefit Plans. In the event of a Change in Control, unless Executive's
          employment is terminated for Cause, the Company will, at the Company
          expense, maintain in full force and effect for Executive's continued
          benefit, for a period of four (4) years following the Date of
          Termination, the health, dental, disability and other welfare
          benefits, plan, programs and arrangements substantially equivalent to
          the most valuable coverage provided under any plan maintained by the
          Company from time to time during such period. In addition, Executive
          will continue to be provided during the four (4) years following the
          Date of Termination, with the same life insurance coverage maintained
          on his life immediately prior to the Date of Termination. These
          benefits shall be reduced by the amount of similar benefits provided
          to Executive during such period by a subsequent employer, as
          determined solely by the Board. For the purposes of enforcing this

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          offset provision, Executive shall notify the Board as to the terms and
          conditions of any subsequent employment and the corresponding benefits
          received pursuant thereto, and shall provide, or cause to provide the
          Board, correct, complete, and timely information concerning the same.

     6.4  No Mitigation__ Re guir . Executive will not be required to mitigate
          the amount of any payment provided for in this Section 6 by seeking
          other employment or otherwise, nor will the amount of any payment
          provided for in this Section 6 be reduced by any compensation earned
          by Executive as the result of employment with another employer after
          the Date of Termination or otherwise, except for a reduction in
          benefits as set forth in subsection 6.3.

     6.5  Tax Gross-up Payment. If any payments or benefits provided pursuant to
          this Section 6 are subject to an excise tax on an "excess parachute
          payment" under Section 4999 of the Internal Revenue Code of 1986 (the
          "Code"), or any successor provision of the Code, or are subject to an
          excise or penalty tax under any similar provision of any other revenue
          system to which Executive may be subject, the Company will provide a
          gross-up payment to Executive in order to place Executive in the same
          after-tax position Executive would have been in had no excise or
          penalty tax become due and payable under Code Section 4999 (or any
          successor provision) or any similar provision of another revenue
          system. No gross-up payment will be made for any excise or penalty tax
          attributable to any stock options granted to Executive, or for any
          other payments or benefits provided to Executive under other sections
          of this Agreement.

Section 7. Successors; Binding Agreement.
           ------------------------------

     7.1  Assumption by Company's Successor. The Company will request any
          successor (whether direct or indirect, by purchase, merger,
          consolidation or otherwise) to all or substantially all of the
          business and/or assets of the Company, by agreement in form and
          substance reasonably satisfactory to Executive, to expressly assume
          and agree to perform this Agreement. Failure of the Company to obtain
          that agreement prior to the effectiveness of any succession will be a
          breach of this Agreement and will entitle Executive to payments and
          benefits from the Company in the same amount and on the same terms to
          which Executive would be entitled under this Agreement if Executive
          terminated Executive's employment for Good Reason within three (3)
          years following a Change in Control, except that for purposes of
          implementing the foregoing, the date on which that succession becomes
          effective will be deemed the Date of Termination. As used in this
          Agreement, "Company" means Gateway Energy Corporation and any
          successor to its business and/or assets regardless of whether such
          successor specifically assumes and agrees to perform this Agreement.

<PAGE>


     7.2  Enforcement by Executive's Successor. This Agreement will inure to the
          benefit of and be enforceable by Executive's personal or legal
          representatives, executors, administrators, successors, heirs,
          distributees, devisees and legatees. If Executive dies subsequent to
          the termination of Executive's employment while any amount would still
          be payable to Executive pursuant to this Agreement if Executive had
          continued to live, all those amounts, will be paid in accordance with
          the terms of this Agreement to Executive's devisee, legatee or other
          designee or, if there be no designee, to Executive's estate. The
          foregoing payment will be made in a lump sum within sixty (60) days
          following the date of Executive's death.

     Section 8. Working Facility
                ----------------

     Executive will perform his services hereunder at the principal office of
the Company, located in Houston, Texas, except as travel to other locations is
warranted by the business of the Company. The Company shall provide Executive
with such office space, secretarial help, and other facilities and services as
may be suitable to his position and appropriate for the performance of his
duties.

     Section 9. Expenses and Benefits.
                ----------------------

     The Company shall pay or reimburse Executive for any expenses reasonably
incurred by him in furtherance of his duties hereunder, including, but not
limited to, reasonable expenses for traveling, meals and hotel accommodations,
upon submission by Executive of vouchers or itemized statements therefore,
prepared in compliance with such rules and policies as the Company may from time
to time adopt and as may be required in order to permit such payments as proper
deductions by the Company under the Internal Revenue Code and the rules and
regulations adopted pursuant thereto, now or hereafter in effect.

     Executive shall have made available to him, on substantially the same terms
as other management level employees of the Company, group insurance, retirement
plans, and other benefit programs in effect from time to time during the term of
Executive's employment. Executive's participation under any group insurance
programs, retirement plans or other benefit programs shall be subject to the
applicable terms and conditions of the same. This paragraph shall not be
construed as a commitment on the part of the Company to establish, maintain, or
continue any such plans or programs.

     Section 10. Notice.
                 -------

     For purposes of this Agreement, notices and all other communications
provided for in this Agreement will be in writing and will be deemed to have
been duly given when delivered or mailed by United States registered mail,

<PAGE>


return receipt requested, postage prepaid, addressed to the respective addresses
set forth on the first page of this Agreement, provided that all notices to the
Company will be directed to the attention of the Chief Executive Officer of the
Company (or if the notice is from the Chief Executive Officer, to the Secretary
of the Company), or to such other address as either party may have furnished to
the other in writing in accordance with this Section 10, except that notice of
change of address will be effective only upon receipt.

     Section 11. Modification and Waiver.
                 ------------------------

     No provision of this Agreement may be modified, waived or discharged unless
that waiver, modification or discharge is agreed to in writing by Executive and
such officer as may be specifically designated by the Board of Directors of the
Company. No waiver by either party at any time of any breach by the other party
of, or compliance with, any condition or provision of this Agreement to be
performed by that other party will be deemed a waiver of similar or dissimilar
provisions or conditions at the time or at any prior or subsequent time.

     Section 12. Construction.
                 -------------

     This Agreement supersedes any oral agreement between Executive and the
Company and any oral representation by the Company to Executive with respect to
the subject matter of this Agreement. The validity, interpretation, construction
and performance of this Agreement will be governed by the laws of the State of
Texas.

     Section 13. Severability.
                 -------------

     If any one or more of the provisions of this Agreement, including but not
limited to Section 18 hereof, or any word, phrase, clause, sentence or other
portion of a provision is deemed illegal or unenforceable for any reason, that
provision or portion will be modified or deleted in such a manner as to make
this Agreement as modified legal and enforceable to the fullest extent permitted
under applicable laws. The validity and enforceability of the remaining
provisions or portions will remain in full force and effect.

     Section 14. Counterparts.
                 -------------

     This Agreement may be executed in two or more identical counterparts, each
of which will take effect as an original and all of which will evidence one and
the same agreement.

<PAGE>


     Section 15. Legal Fees.
                 -----------

     If the Company breaches this Agreement or if, within three (3) years
following a Change in Control, (a) Executive's employment is terminated by the
Company other than for Cause or Disability; or (b) Executive terminates
Executive's employment for Good Reason, the Company will reimburse Executive for
all legal fees and expenses reasonably incurred by Executive as a result of that
termination (including all those fees and expenses, if any, incurred in
contesting or disputing the termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement, unless the Company is the
prevailing party in such contest or dispute).

     Section 16. Employment by a Subsidiary.
                 ---------------------------

     Either the Company or a Subsidiary may be Executive's legal employer. For
purposes of this Agreement, any reference to Executive's termination of
employment with the Company means termination of employment with the Company and
all Subsidiaries, and does not include a transfer of employment between any of
them. The actions referred to under the definition of "Good Reason" in
subsection 5.3 include the actions of the Company or Executive's employing
Subsidiary, as applicable. The obligations created under this Agreement are
obligations of the Company. A change in control of a Subsidiary will not
constitute a Change in Control for purposes of this Agreement unless there is
also a contemporaneous Change in Control of the Company. For purposes of this
Agreement, a "Subsidiary" means an entity more than fifty percent (50%) of whose
equity interests are owned directly or indirectly by the Company.

     Section 17. Arbitration.
                 ------------

     Except for the rights and duties of the parties set forth in Section 18 of
this Agreement, any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in Houston, Texas,
according to the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that Executive shall be entitled to seek
specific performance of his right to be paid for all periods up to the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.

     Section 18. Restrictive Covenant.
                 ---------------------

     18.1 Need for Protection. Executive acknowledges that, because of his
          senior executive position with the Company, his knowledge of the
          affairs of the Company and his relations with its suppliers and
          customers, he could do serious damage to the financial welfare of the
          Company, should he compete or assist others in competing with the
          business of the Company. Accordingly, the parties agree as follows:

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     18.2 Confidential Information.

          (a)  Non-Disclosure. Except as the Company may permit or direct in
               writing, during the term of this Agreement and thereafter,
               Executive agrees that he will never disclose to any person or
               entity any confidential or proprietary information, knowledge, or
               data of the Company, which he may have obtained while in the
               employ of the Company, relating to any customers, customer lists,
               methods of distribution, sales, prices, profits, costs,
               contracts, inventories, suppliers, dealers, distributors,
               business prospects, business methods, manufacturing ideas,
               formulas, plans or techniques, research, trade secrets, or know
               how of the Company.

          (b)  Return of, Records. All records, documents, software, computer
               disks, and any other form of information relating to the business
               of the Company, which are or were prepared or created by
               Executive, or which may or did come into his possession during
               the term of his employment with the Company, including any and
               all copies thereof, shall be returned to the Company, or as the
               case may be, shall remain in the possession of the Company, upon
               termination of employment for any reason.

          (c)  Future Employment. Nothing in this section shall limit the
               Executive's right to carry Executive's accumulated career
               knowledge and professional skills to any future employment,
               subject to the specific limitations of the foregoing provisions
               of this section and the covenants set forth below.

     18.3 Non-Competition.

          Scope of Operations. The parties hereto acknowledge that the Company's
          operations are within the continental United States, and that it
          conducts business throughout the continental United States, thus, the
          Company's need for protection against unfair competition is throughout
          the continental United States.

          (b)  Covenant Not To Compete. Executive agrees that he will not,
               during the term of this Agreement and for a period of six (6)
               months after his employment with the Company has terminated:

<PAGE>


               engage directly or indirectly, for his own personal benefit or
               the benefit of any person or entity other than the Company, in
               bidding on any projects which would result in direct competition
               with the Company, anywhere in the continental United States; or

          (2)  develop, promote, invest in, provide financing for, be employed
               by, or operate any business on his own behalf, or for any other
               person or entity, which bids or solicits on any projects which
               would result in direct competition with the Company, or, assist
               any other person in doing so.

     18.4 Termination Without Cause. It is understood and agreed that in the
          event the Company terminates Executive's employment without Cause,
          subsection 18.3 hereof shall be null and void. Notwithstanding the
          foregoing provision, however, if Executive's employment is terminated
          under circumstances which entitle him to receive the payments and
          benefits provided in Section 6 of this Agreement, then in such event,
          the provisions of Section 18.3 hereof shall remain in full force and
          effect.

     18.5 Judicial Modification. In the event that any court of law or equity
          shall consider or hold any aspect of this Section 18 to be
          unreasonable or otherwise unenforceable, the parties hereto agree that
          the aspects of this section so found may be reduced, reformed or
          modified by appropriate order of the court, and shall thereafter
          continue, as so modified, in full force and effect.

     18.6 Injunctive Relief The parties hereto acknowledge that the remedies at
          law for breach of this section will be inadequate, and the Company
          shall be entitled to injunctive relief for violation thereof;
          provided, however, that nothing herein shall be construed as
          prohibiting the Company from pursing any other remedies available for
          such breach or threatened breach, including the recovery of damages
          from Executive.

     Section 19. Termination and Severance: No Change in Control.
                 ------------------------------------------------

     Executive's employment under this Agreement may be terminated, separate and
apart from the occurrence of a Change in Control, in one of the following ways:

     19.1 Mutual Agreement At any time by mutual written agreement of both
          parties to this Agreement, subject to any terms and conditions
          specified in such mutual written agreement; or

     19.2 For Cause. At any time by, the Company, by written notice to
          Executive, terminating this Agreement and discharging Executive for
          Cause, as defined in Section 5.1 of this Agreement; or

<PAGE>


     19.3 Automatically. Automatically and immediately should one of the
          following events occur:

          (a)  Executive dies; or

          (b)  Executive's Disability, as defined in Section 5.2 of this
               Agreement.

     19.4 Severance. In addition to the foregoing, Company may at any time, upon
          thirty (30) days' written notice, terminate this Agreement without
          Cause. If termination occurs during the initial term of this
          Agreement, Executive shall be entitled to severance pay in an amount
          equal to (including amounts paid during the 30-day notice period) one
          (1) years' base salary at the rate then in effect, or the base salary
          attributable to the remaining months of the term of this Agreement at
          the rate then in effect, whichever is greater. If termination occurs
          during a one (1) year renewal period under this Agreement, Executive
          shall be entitled to severance pay in an amount equal to (including
          amounts paid during the 30-day notice period) the base salary
          attributable to the remaining months of the one (1) year term at the
          rate then in effect. In either event, Executive shall also receive a
          pro rata share of any cash bonus paid for the year, attributable to
          that portion of the year during which Executive was employed, and will
          also receive any unpaid bonus attributable to the previous year of
          employment. The base salary portion of the severance shall be payable,
          at the Company's option, in a lump sum or in equal monthly
          installments consistent with the Company's ordinary payroll practices.
          The cash bonus portion of the severance shall be paid in accordance
          with the schedule set forth in the Plan. Executive shall also be
          entitled to continuation of benefits through the end of the employment
          term then in effect under this Agreement, or if sooner, until such
          time as he secures alternative employment which provides him with
          comparable beneRts. If the Company terminates this Agreement without
          Cause, the Company shall have the right at its option, to require
          Executive to immediately leave the Company's premises; provided, that
          the Company shall be obligated to pay (as part of thee severance)
          Executive's base salary during. the 30-day notice period.

<PAGE>


     Section 20. Exclusivity of Services.
                 ------------------------

     Executive agrees that his employment with the Company will be full time,
and that he will devote his best efforts and attention to the business of the
Company.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                           GATEWAY ENERGY CORPORATION, INC.




                                           John B. Ewing,
                                           Chairman Compensation and
                                           Stock Option Committee