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The annual meeting of stockholders (the “Annual Meeting”) of Blue Dolphin Energy Company (the “Company”) will be held on Thursday, May 15, 2008,14, 2009, at 9:30 a.m., local time, at The Houston Club, at 811 Rusk Street, Houston, Texas 77002 in the Magnolia Room (9^th Floor) for the following purposes:

Additional information regarding the meeting and the above proposals is set forth in the accompanying Proxy Statement. The Board of Directors has fixed the close of business on April 4, 2008,2, 2009, as the record date for the meeting, and only holders of common stock on the record date are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof.

You are cordially invited to attend the Annual Meeting in person.Even if you plan to attend the Annual Meeting, we urge you to vote your shares at your earliest convenience in order to ensure that your shares will be represented at the meeting. You can vote by signing, dating and returning the enclosed proxy cardform or by submitting your proxy voting instructions through the Internet. If you hold your shares through a broker or other nominee, you should contact your broker to determine whether you may submit your proxy by telephone or Internet.

Houston, Texas
April 16, 200820, 2009

To Our Stockholders:

The activity levelWith the downturn of the economy and Hurricane Ike, the second half of last year turned out to be difficult for our industry in general, remainsand for us. We also expect 2009 to be a challenging year. However, times like these yield opportunities. We have assumed an active role in consolidation of smaller companies and expect to be able to broaden our asset base without taking high risks or paying inflated prices, which we have seen a lot of over the last few years.

Our pipeline assets performed well in 2008 and the outlook for the near term looks good despite the downturnsuffered only minor damage and interruption as a result of Hurricane Ike. A successful well drilled in the economy. The exploratory drilling alonglate 2008 was completed and connected to our Blue Dolphin Pipeline in the first quarter of 2009. We participated in the development of the prospect and, our Galveston Area 350 Pipeline during this past fiscal year resulted in four (4) discoveries, all of which have been connectedaddition to our systems and are now on stream. One disappointment has been therevenue from transportation services, we will receive a small overriding royalty interest. The delay in the drilling of the acreage around our Omega Pipeline in the High Island area.Area continues to be a disappointment. Several high priced blocks have been leased by various operators, but they have not yet been drilled.

Our income from sales of oil and gas production has continued to decline in line with the natural depletion of the reservoirsreserves in which we have interests. The historyAs a result of Hurricane Ike, our current production goes back to our oil and gas prospect generating activity, which resulted in several after pay-out interests on offshore blocks. During this past year we participated in the drilling of a development well in High Island Block 115, which was successful. The well is now producing approximately 9 MMcfd. Our net revenue interest is small, just over 2%; however, production revenueshut-in from the well will offset some of the decline from our other properties. We also will be participating in the drilling of another well on one of our High Island blocks this year, the results of which should be available around the middle of the year. We have not yet decided to go forward with the oil and gas prospect generating program as mentioned to you last year. The Board of Directors is currently considering expanding our business area beyond the pipeline gathering business, which has been our main focus the last few years. We will report separately on any significant addition to the direction of the Company.

Earlier this month, we hiredaccepted the resignation of Mr. Michael Jacobson, President, which will be effective on May 14, 2009 following our Annual Meeting of Stockholders. Mike has been a loyal part of Blue Dolphin’s senior management team for more than nineteen years. His influence, professionalism and leadership directed us through many trials with positive results. We appreciate his efforts in preparing the Company to move to the next level and wish him the best in all of his future endeavors. Mr. Thomas Heath will be appointed to strengthen our business development efforts. I am pleased to report to you that, although we have not yet consummated an acquisition,the position of President upon Mr. Jacobson’s departure. Tom, has made good progress in the time hewho has been here. I amwith Blue Dolphin for two years as Executive Vice President, has an understanding of the current inner-workings of the Company and has more than 20 years of energy experience having served in various management positions. We are confident that weTom will soon seebe able to take the resultsreins of his efforts.the Company and lead us into the next phase of our evolution.

We appreciate your support and look forward to a successful coming year.the work ahead.

All shares of Common Stock represented at the Annual Meeting by properly executed proxies will be voted in accordance with the instructions indicated on the proxies. If no instructions are indicated with respect to any shares for which properly executed proxies have been received, such proxies will be votedvoted: (i) “FOR” election of all nominees to the Board of DirectorsDirectors; (ii) “FOR” amending the Company’s Certificate to increase the number of authorized shares of Common Stock from 25,000,000 shares to 100,000,000 shares; and (iii) in the discretion of the proxy holder on any other matters properly brought before the Annual Meeting.

The following sets forth, as of April 16, 2008,20, 2009, each Director Nominee’s name, all positions held with the Company, principal occupation, age and year in which the Director Nominee first became a director of the Company.

The following sets forth the age and background of each executive officer and the year in which the executive officer first joined the Company:

During 2007,2008, the Board of Directors held four regular meetings.meetings and one special meeting of the Board of Directors. Each director attended at least 75% of the total number of meetings of the Board of Directors and committees on which he served. The Board of Directors has two standing committees, an Audit Committee and a Compensation Committee.

During 2007,2008, the Audit Committee consisted of Dr. Benz and Messrs. Benz, Kaffie and Ostbye with Mr.Dr. Benz serving as Chairman. The Board of Directors has affirmatively determined that Mr.all members of the Audit Committee are independent and that Dr. Benz qualifies as an Audit Committee Financial Expert. During the fiscal year ended December 31, 2007,2008, the Audit Committee met fivefour times. The Audit Committee’s duties include overseeing financial reporting and internal control functions and the Audit Committee’s charter is available on our website (www.blue-dolphin.com).

During 2007,2008, the Compensation Committee consisted of Messrs. Goodpasture and Kaffie. The Board of Directors has affirmatively determined that all members of the Compensation Committee are independent. The Compensation Committee does not have a charter, however, its duties are to oversee and set the Company’s compensation policies, to approve compensation of executive officers and to administer its stock incentive plan. The Compensation Committee met one time during the fiscal year ended December 31, 2007.2008.

Given the size of the Board of Directors and that a majority of the members are independent, as defined under NASDAQ Stock Market listing standards, the Board of Directors adopted a “Board of Directors Nomination Procedures” policy in July 2005 in lieu of appointing a standing nominating committee. The policy is used by independent members of the Board of Directors when choosing nominees to stand for election.

The Board of Directors will consider for possible nomination qualified nominees recommended by stockholders. As addressed in the “Board of Directors Nomination Procedures” policy, the manner in which independent directors evaluate nominees for director as recommended by a stockholder will be the same as that for nominees received from other sources. Stockholders who wish to propose a qualified candidate for consideration should submit complete information as to the identity and qualifications of that person to the Secretary of the Company no later than February 13, 2009,12, 2010, for the 20092010 Annual Meeting of Stockholders. The information should be sent to: Blue Dolphin Energy Company, Attention: Secretary, 801 Travis Street, Suite 2100, Houston, Texas 77002. (See “Nominations and Proposals by Stockholders for the 20092010 Annual Meeting of Stockholders in this Proxy Statement for more information.)

The Board of Directors will continue to nominate qualified incumbent directors of whom the Board of Directors believes will continue to make important contributions to the Board of Directors and the Company. The Board of Directors generally requires that nominees be persons of sound ethical character, be able to represent all stockholders fairly, have demonstrated professional achievement, have meaningful experience and have a general appreciation of the major business issues facing the Company.

The Board of Directors has affirmatively determined that, with the exception of Mr. Siem, all directors are independent and have no material relationship with the Company (either directly or indirectly or as a stockholder or officer of an organization that has a relationship with the Company), and that all members of the Audit and Compensation Committees are independent, pursuant to NASDAQ StockCapital Market listing standards.

All directors, officers and employees must act ethically at all times and in accordance with the Company’s Code of Conduct policy adopted by the Board of Directors in July 2005. The Audit Committee has established procedures to enable anyone who has a concern about the Company’s conduct or policies, or any employee who has a concern about the Company’s accounting, internal accounting controls or auditing matters, to communicate that concern directly to the Chairman of the Audit Committee. The Company’s Code of Conduct policy prohibits any employee from retaliating or taking any adverse action against anyone for raising or helping to resolve an integrity concern. Violations and/or concerns may be sent anonymously by mail to Laurence N. Benz (Audit Committee Chairman, Blue Dolphin Energy Company), 13000 Equity Place, Suite 105, Louisville, Kentucky 40223, via email tolarry@physicaltherapist.com or such other contact information for Dr. Benz that the Company may post on its website from time to time.

The table below sets forth certain information with respect to the beneficial ownership for shares of Common Stock (the only class of voting security issued and outstanding) as of April 16, 2008,2, 2009, as held by: (i) all persons or institutions known by us to be beneficial owners of 5% or more of the outstanding shares of Common Stock, (ii) each director and Director Nominee, (iii) each executive officer; and (iv) all executive officers and directors as a group. Unless otherwise indicated, each of the following persons or institutions have sole voting and dispositive power with respect to such shares.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, executive officers, and stockholders who own more than 10% of our Common Stock, to file reports of stock ownership and changes in ownership with the SEC and to furnish us with copies of all such reports as filed. Based solely on a review of the copies of the Section 16(a) reports furnished to us, the Company believes that during 2007,2008, all of its directors, executive officers and greater than 10% stockholders complied with their Section 16(a) filing requirements.

The Company has tentatively set the 20092010 Annual Meeting of Stockholders for May 15, 2009.13, 2010. Accordingly, stockholders should submit nominations and proposals in accordance with the guidance set forth below.

The Company’s Certificate of Incorporation provides that no person shall be eligible for nomination and election as a director unless written notice of such nomination is received from a stockholder of record by the Secretary of the Company 90 days before the anniversary date of the previous year’s annual meeting. Further, such written notice is to be accompanied by the written consent of the nominee to serve, the name, age, business and residence addresses, and principal occupation of the nominee, the number of shares beneficially owned by the nominee, and any other information which would be required to be furnished by law with respect to any nominee for election to the Board of Directors. Stockholders who desire to nominate persons to serve on the Board of Directors at the 20092010 Annual Meeting of Stockholders must submit nominations to the Company, at its principal executive office, so that such notice is received by the Company no later than February 13, 2009.12, 2010. In order to avoid controversy as to the date on which any such nomination is received by the Company, it is suggested that stockholders submit their nominations, if any, by certified mail, return receipt requested. (See “Nominating“Nomination Procedures” in this Proxy Statement for more information.)

Stockholders who desire to present proposals, other than notices of nomination for the election of directors, to stockholders of the Company at the 20092010 Annual Meeting of Stockholders, and to have such proposals included in the Company’s proxy materials, must submit their proposals to the Company, at its principal executive office, by December 25, 2008.21, 2009. In order to avoid controversy as to the date on which any such proposal is received by the Company, it is suggested that stockholders submit their proposals, if any, by certified mail, return receipt requested.

Moreover, any stockholder who intends to submit a proposal for consideration at the Company’s 20092010 Annual Meeting of Stockholders, but not for inclusion in the Company’s proxy materials, must notify the Company. Pursuant to the rules of the SEC, such notice must: (i) be received at the Company’s executive offices no later than March 13, 20098, 2010 and (ii) satisfy the rules of the SEC.

UHY has been engaged by the Company’s Board of Directors as the Company’s independent registered public accounting firm since 2002. The Company expects that they will continue to serve as the Company’s independent registered public accounting firm. Through December 31, 2007,2008, UHY had a continuing relationship with UHY Advisors, Inc. (“Advisors”) from which it leased auditing staff who were full time, permanent employees of Advisors and through which UHY’s partners provide non-audit services. UHY has only a few full-time employees and therefore, few, if any of the audit services performed were provided by permanent full-time employees of UHY. UHY manages and supervises the audit services and audit staff, and is exclusively responsible for the opinion rendered in connection with its examination. Representatives of UHY are expected to be present at the Annual Meeting, with the opportunity to make a statement if they desire to do so, and to respond to questions.

Houston, Texas
April 16,20, 2008

The undersigned acknowledges receipt of the Notice of the Annual Meeting of Stockholders and the Proxy Statement, revokes all previous proxies and appoints Michael J. Jacobson and T. Scott Howard, and each of them, as proxies, each with the power to appoint his substitute, and authorizes each of them to represent and to vote, as designated on the reverse hereof,below, all of the shares of common stock of Blue Dolphin Energy Company held of record by the undersigned at the close of business on April 4, 20082, 2009, at the Annual Meeting and at any adjournment or postponement thereof.