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In order to develop economical methane fermentation systems, a pilot scale fermentor with a rotational gas discharge system composed of a pivot and a rotational bar was constructed. The heat exchange is accomplished by direct contact between the hot biogas from the bar and the slurry in the fermentor. Water and air instead of waste slurry and biogas were used in this study. Energy and material balance analysis were used to investigate the rotational and heating characteristics of the system. Airflow rate from the rotational bar and heat transfer from the inlet air to the water were first observed in the system without the gasbag. The enclosed fermentor with the gas bag was heated to obtain the water temperature increase that was used to develop a heating model. Data obtained seems to indicate that the new heating system is feasible for practical use.