Ok so maybe I will need to leave the door open when I'm in there, maybe have a fan blowing out? It will still be warmer than outside...
It IS a gas water heater, however as long as the pilot lite is lit, I shouldn't have any problems as the cigar isn't going to ignite anything. (and if I did have a leak somewhere the pilot lite would more than likely ignite it before I got in there with a cigar.) You aren't supposed to store anything flammable (i.e. gasoline) near the hot water heater, but I'm pretty sure that another "flame" isn't going to hurt anything.
The room is 5'x4'.
I have a few contacts with the gas companies, so I'll investigate it a little more, but I'm pretty sure I'll be ok.
I'll post here before I go out there for my first smoke, and If I don't post again after that, well, at least you will know what happened!