EXHIBIT 99.1

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


FOR IMMEDIATE RELEASE                                           October 31, 2005


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

BLUE DOLPHIN ENERGY ANNOUNCES RESTATEMENT OF FIRST AND SECOND QUARTER FINANCIALS
AND OTHER SIGNIFICANT EVENTS

Blue Dolphin Energy Company,  Inc., a Delaware  corporation (the "Company") will
be filing  amendments  to its Forms 10-QSB for the first and second  quarters of
2005 to recognize non-cash compensation expense pursuant to Financial Accounting
Standards  Board  Interpretation  No. 44  "Accounting  for Certain  Transactions
involving  Stock  Compensation - An  Interpretation  of APB Opinion No. 25." The
Company's previously issued financial statements for the quarterly periods ended
March 31, 2005 and June 30,  2005 should no longer be relied on because  they do
not reflect such non-cash compensation expense.

The Company expects to recognize  additional non-cash  compensation  expense for
the six months ended June 30, 2005 of $686,000, or $0.09 per share.  Recognition
of this  expense  will  increase  Additional  Paid in Capital  by an  equivalent
amount. There will be no liability to the Company recognized as a result of this
additional  expense.  The Company expects the additional  non-cash  compensation
expense to increase the net loss for the first quarter of 2005 by  approximately
$533,000,   or  $0.07  per  share.   Additional  non-cash  compensation  expense
recognized  in the  second  quarter  of 2005  is  expected  to be  approximately
$153,000, or $0.02 per share.

The  Company  also  announces  that  it  has  received  cash  payments  totaling
$1,383,247  for  production  from  July 1,  2004  through  June  2005  from  its
after-payout  working  interest  in High  Island  Block 37.  There are two wells
currently producing in the block at a combined rate of approximately 25 MMcf per
day. The Company has a working interest of approximately 2.7% in the wells.

Additionally, production from the Company's working interest in High Island
Block A-7 has increased significantly following the successful re-completion of
two wells in August 2005. These wells are currently shut-in awaiting the
resumption of 3rd party transportation services.




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.