EXHIBIT 99.1


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

FOR IMMEDIATE RELEASE                                             March 13, 2006

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

BLUE DOLPHIN ENERGY ANNOUNCES CLOSING OF PRIVATE PLACEMENT

Blue Dolphin  Energy  Company  announced  today that it has entered into a stock
purchase agreement with certain  accredited  investors for the private placement
of 1,171,432  shares of the company's  common stock at a purchase price of $1.75
per share. The sale of the shares closed on March 8, 2006. The net proceeds from
the offering after the payment of commissions and expenses will be approximately
$2,025,000.  The Company  expects to use the proceeds for possible  acquisitions
and planned  expansions of its facilities,  as well as for working capital needs
and general corporate purposes.  In addition,  in connection with the terms of a
Placement Agency Agreement  between the Company and Starlight  Investments,  LLC
dated May 27,  2005,  the Company  issued  warrants to purchase an  aggregate of
8,572 shares of common stock.  The warrants vest  immediately  upon issuance and
the exercise price per share varies based on the following conditions: (i) until
the later of the  registration  of the warrants or one year from the issue date,
110% of the purchase price per share in the offering, (ii) from the later of (x)
the  registration  of the  warrants  and (y) one year,  until two years from the
issue date, 120% of the purchase price per share in the offering and (iii) after
the  expiration  of two years from the issue date of the  warrants,  130% of the
purchase price per share in the offering.

The shares of common stock and the  warrants  were issued  without  registration
under the  Securities  Act of 1933,  as amended (the "Act") in reliance upon the
exemptions from registration provided by Section 4(2) of the Act and Rule 506 of
Regulation D promulgated thereunder. However, the shares of common stock and the
warrants  are subject to certain  registration  rights as set forth in the Stock
Purchase Agreement,  whereby the Company agreed to file a registration statement
with the Securities  and Exchange  Commission no later than May 15, 2006 for the
purpose of registering the Shares for resale.

Blue Dolphin  Energy Company is engaged in the gathering and  transportation  of
natural gas and  condensate,  and the production and  development of oil and gas
properties. Questions should be directed to Gregory W. Starks, 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.

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. 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.