EXHIBIT 99.2


                           BLUE DOLPHIN ENERGY COMPANY


                                  NEWS RELEASE

FOR IMMEDIATE RELEASE                                           August 3, 1999


HOUSTON, TEXAS - BLUE DOLPHIN ENERGY COMPANY (NASDAQ SYMBOL: BDCO)

Blue Dolphin Energy Company announced today that it has signed a definitive
agreement, through its wholly owned subsidiary Blue Dolphin Exploration Company,
to acquire a 75% ownership interest of American Resources Offshore, Inc. ("ARO")
(NASD: GASS), through subscription of new shares. At the time of closing, ARO's
assets will be limited to its Gulf of Mexico assets. The purchase price for the
ARO shares will be approximately $4.7 million, subject to certain upward or
downward adjustments based on ARO's liabilities at closing and its revenues and
expenses from its Gulf of Mexico properties from January 1, 1999 through closing
of the transaction. Concurrently with the transaction, ARO will sell an 80%
interest in its Gulf of Mexico assets to Fidelity Oil Holdings, Inc. a
subsidiary of MDU Resources Group, Inc. (NYSE: MDU). The proceeds received by
ARO will be used to retire debts.

After closing the above mentioned transactions, ARO's assets will consist of an
average 6 % non-operated working interest in eight producing properties and one
proved undeveloped property along with leasehold interests in 34 additional
offshore tracts all located in the Gulf of Mexico offshore Louisiana and Texas.
The properties have proven reserves of approximately 7.2 billion cubic feet of
natural gas equivalent. Significant probable and possible reserves and
exploratory drilling opportunities also exist.

"The ARO transaction is a significant step forward to increasing our proven
reserves, as well as providing the opportunity to exploit the probable, possible
and exploratory reserve potential of these properties", stated Ivar Siem,
Chairman of Blue Dolphin. "Working together with Fidelity Oil was important to
us in reaching an agreement with ARO ".

Closing is expected to occur in the fourth quarter 1999 and is subject to a
number of conditions, including the approval of ARO's stockholders and the
simultaneous closing of the transaction between ARO and Fidelity Oil Holdings,
Inc.

BLUE DOLPHIN ENERGY COMPANY is engaged in the gathering and transportation of
natural gas and condensate, exploration and acquisition of oil and gas
properties, and development of an offshore terminal and storage facility to
handle crude oil and refined products. Questions should be directed to G. Brian
Lloyd, Vice President, Treasurer, at the Company's offices in Houston, Texas,
(713) 227-7660. For further information see our home page at
http://www.blue-dolphin.com.


                 801 Travis o Suite 2100 o Houston, Texas 77002
                       (713) 227-7660 o FAX (713) 227-7626