EXHIBIT 99.1

                                  NEWS RELEASE
                                  ------------


FOR IMMEDIATE RELEASE                                            October 3, 2005

Houston, Texas - Blue Dolphin Energy Company (NASDAQ Symbol: BDCO)

BLUE DOLPHIN ENERGY REPORTS ENTERING INTO NEW PIPELINE TRANSPORTATION AGREEMENTS

Blue Dolphin Energy Company  announced that its  wholly-owned  subsidiary,  Blue
Dolphin  Pipe Line  Company  ("Company"),  has entered  into gas and  condensate
transportation  agreements  with a new customer to deliver  production  into the
Blue Dolphin Pipeline system at the Company's Galveston Block 288C platform. The
Company expects  transportation  services for this  producer/shipper to commence
late in the fourth quarter.  Throughput  volumes are not yet known.  This is the
second  new  customer  to  contract  with  the  Company  for  the  provision  of
transportation services in the past three months.

The Blue Dolphin  Pipeline system gathers and transports gas and condensate from
various  offshore  fields in the  Galveston  Area in the Gulf of Mexico to shore
facilities in Freeport, Texas. The Company owns an 83% undivided interest in the
system.

Blue Dolphin  Energy Company is engaged in the gathering and  transportation  of
natural gas and condensate.  Questions  should be directed to Gregory W. Starks,
at  the  Company's  offices  in  Houston,  Texas,   713-227-7660.   For  further
information see our Home Page at http://www.blue-dolphin.com.

Certain of the  statements  included  in this  press  release,  which  express a
belief, expectation or intention, are "forward-looking"  statements as that term
is  defined  in the  Securities  Act of 1933,  as  amended,  and the  Securities
Exchange  Act of 1934,  as  amended.  The  words  "expect,"  "plan,"  "believe,"
"anticipate,"  "project,"  "estimate,"  and similar  expressions are intended to
identify forward-looking  statements.  These forward-looking  statements are not
guarantees of future  performance or events and such statements involve a number
of risks, uncertainties and assumptions,  general economic conditions,  interest
rates,  and other  factors.  Should one or more of these risks or  uncertainties
materialize or should the underlying assumptions prove incorrect, actual results
and outcomes may differ  materially from those indicated in the  forward-looking
statements.  Readers  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking statements,  which speak only as of the date hereof. The Company
undertakes  no  obligation to republish  revised  forward-looking  statements to
reflect  events  or  circumstances  after  the date  hereof  or to  reflect  the
occurrence of unanticipated events.