BLUE DOLPHIN ENERGY COMPANY


PRESS RELEASE

FOR IMMEDIATE RELEASE
August 6, 2009

BLUE DOLPHIN ENERGY COMPANY SECURES OPTION TO ACQUIRE LAZARUS ASSETS

Houston,  August 6 / PRNewswire / -- Blue Dolphin Energy Company (NASDAQ:  BDCO)
("Blue Dolphin"), an independent oil and gas company with operations in the Gulf
of Mexico,  announced  today  that it has  loaned $2  million  to  Houston-based
Lazarus Energy Holdings, LLC ("Lazarus") under a promissory note in exchange for
a seven month  option to acquire a portion of Lazarus'  assets  under a purchase
and sale agreement.  The primary assets included in the deal are a light,  sweet
crude  topping unit in Nixon,  Texas,  a barge and truck  terminal in Mermentau,
Louisiana and 560,000 barrels of storage associated with the two facilities. The
loan will enable  Lazarus,  among other things,  to activate the currently  idle
Nixon  facility and continue  refurbishment  of the  Mermentau  terminal and its
associated Class I disposal well.

In the event Blue Dolphin  exercises  its option to acquire the Lazarus  assets,
Blue  Dolphin will issue  47,141,196  shares of its common stock to Lazarus in a
non-cash  transaction.  Issuance of the common stock under the purchase and sale
agreement  would  constitute a change in control,  and closing will therefore be
subject to shareholder approval, as well as other customary closing conditions.

"The  teaming of Blue  Dolphin and Lazarus  allows both  entities to move toward
profitability  through the realization of economies of scale, cost efficiencies,
and  increased  credit  availability,   as  well  as  the  full  utilization  of
experienced  management resources," said Ivar Siem, Chairman and Chief Executive
Officer of Blue Dolphin.

Purchased  by  Lazarus  in 2006,  the Nixon  facility  is  expected  to  restart
operations in the fourth quarter of 2009, with an initial processing capacity of
15,000  barrels per day. The facility is a topping unit that will process  light
sweet crude oil into an estimated 200 million gallons of petroleum  products per
year. The bulk of these  products will be jet fuel and diesel  destined for sale
into nearby markets.

As a topping  unit,  the facility has low  operating  costs  compared to complex
refineries  and can adjust its yield of various  products by adjusting its crude
slate.  Since the unit  processes  light sweet crude,  it is insulated  from the
recent  relative  price  increases in heavy sour crude and may actually  benefit
from this shift.  The 56-acre site also has 265,000 barrels of storage  capacity
and is surrounded by significant proven crude production.

The Mermentau  facility was also  purchased by Lazarus in 2006. The 38-acre site
has 11 above-ground  storage tanks totaling 295,000 barrels of storage capacity,
a barge dock,  two truck racks,  as well as a Class I  non-hazardous  commercial
disposal well with an injection capacity of 5,000 barrels a day.

Lazarus was founded by Jonathan Carroll and several senior partners of two major
private equity investment companies.






Blue Dolphin  Energy Company is engaged in the gathering and  transportation  of
natural gas and  condensate  and in the  production  of oil and gas. For further
information visit the Company's website at http://www.blue-dolphin.com.

Contact:
Thomas W. Heath
President
713-568-4725

Certain of the  statements  included  in this  press  release,  which  express a
belief,  expectation or intention,  as well as those regarding  future financial
performance or results, or which are not historical facts, 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,  including
but not limited to  industry  conditions,  prices of crude oil and natural  gas,
regulatory changes,  general economic conditions,  interest rates,  competition,
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. Blue Dolphin
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.

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