June 18, 2008

BPI Energy Expands Leasehold Interest in Illinois Basin

BPI Energy Holdings, Inc. (AMEX: BPG), an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, today announced it has entered into a lease agreement with Western Fuels of Illinois, Inc., for the rights to Herrin and Springfield coalbed methane (CBM) and coal mine methane (CMM) gas over an area of approximately 5,600 acres. The newly acquired acreage is contiguous, with 2,320 acres overlapping BPI's Delta field in Saline County, Ill., where it currently has wells and is producing CBM from lower coal seams. This lease provides access to two new seams in those wells. The new acreage increases BPI's leasehold assets in Saline County to approximately 13,280 acres, and BPI's gross leasehold interest to approximately 534,280 acres.

"The Herrin and Springfield coal seams are the two thickest seams in the Delta area and offer uncommonly high methane saturation for the Illinois Basin," said James G. Azlein, BPI president and CEO. "Furthermore, the area is the site of previous exploration, and our existing production and gas-gathering systems are already in place.

"In the area where we currently produce and sell CBM at our Delta Project, both the Herrin and Springfield surface seams have typically been mined," Azlein continued. "On the acreage related to this new lease, however, only underground mining has occurred, creating mine voids where gas gathers in sealed chambers. Mine wells will be drilled to exploit this 'gob gas,' which has accumulated and will continue to desorb into these voids.

"There are also some areas on this new acreage where we will drill and produce gas from the Herrin and Springfield seams where no mining has taken place. The wells we plan to drill on this acreage are shallow, and with our current infrastructure already in place, the wells will be low-cost contributors to sales volume in the near term," Azlein concluded.

At April 30, 2008, BPI had 120 producing wells. Current plans call for BPI to drill a total of 24 new CBM and CMM wells on the new lease. The Company will additionally initiate production from the new seams in 10 of its existing Delta wells. BPI internal analysis estimates that the Western Fuels lease has a pv 10 value of $1.87 million to the Company. BPI has made a funding request for this development from its advancing term credit facility with GasRock Capital.

As disclosed in its 10-Q quarterly report for the fiscal quarter ended April 30, 2008, BPI is evaluating other potential options, which include additional advances under the credit agreement with GasRock, which are at the discretion of GasRock; issuance of new debt and/or equity securities; joint ventures or other mergers/combinations; asset sales; or a combination of these alternatives.

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About BPI Energy

BPI Energy (BPI) is an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, which covers approximately 60,000 square miles in Illinois, southwestern Indiana and northwestern Kentucky. The company controls a large CBM acreage position in the Illinois Basin at approximately 534,280 acres.

News releases and other information on the company are available on the Internet at: http://www.bpi-energy.com

Some of the statements contained in this report that are not historical facts, including statements containing the words "believes,""anticipates,""expects,""intends,""plans,""should,""may,""might,""continue" and "estimate" and similar words, constitute forward-looking statements under the federal securities laws. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or the conditions in our industry, on our properties or in the Basin, to be materially different from any future results, performance, achievements or conditions expressed or implied by such forward-looking statements. Some of the factors that could cause actual results or conditions to differ materially from our expectations, include, but are not limited to: (a) our inability to raise the funds necessary to satisfy our existing accounts payable and accrued liabilities; (b) a refusal by GasRock Capital LLC ("GasRock") to make any additional advances under the GasRock Credit Agreement, which are at GasRock's discretion; (c) our inability to repay or refinance the amounts advanced to us by GasRock when such amounts become due on January 30, 2009; (d) a breach by us of a covenant under the GasRock Credit Agreement or other event of default that allows GasRock to accelerate our outstanding obligations; (e) our inability to obtain sufficient financing, close an offering of debt or equity securities, or complete a merger/combination, joint venture, asset sale, selling of rights relating to our litigation against Drummond or other transaction that would enable us to fund our future operations; (f) our failure to accurately forecast CBM production; (g) a decline in the prices that we receive for our CBM production; (h) our failure to accurately forecast operating and capital expenditures and capital needs due to rising costs or different drilling or production conditions in the field; (i) our inability to attract or retain qualified personnel with the requisite CBM or other experience; (j) unexpected economic and market conditions, in the general economy or the market for natural gas; (k) limitations imposed on us by the GasRock Credit Agreement; and (l) potential exposure to losses caused by our derivative contract. We caution readers not to place undue reliance on these forward-looking statements.