EXHIBIT 99.2


[LOGO BLUE DOLPHIN ENERGY COMPANY]

                           BLUE DOLPHIN ENERGY COMPANY

                                  NEWS RELEASE
FOR IMMEDIATE RELEASE                                          September 9, 2004

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

BLUE DOLPHIN ENERGY ANNOUNCES $750,000 DEBT FINANCING

Blue Dolphin Energy Company announced today that it has entered into an
agreement with certain accredited investors and directors for the placement of
promissory notes in an aggregate principal amount of $750,000 and 2.8 million
warrants, at a price of $0.003 per warrant, to purchase shares of the Company's
common stock. The sale of the promissory notes and the first tranche of 1.25
million warrants closed on September 8, 2004, and the second tranche of 1.55
million warrants is subject to stockholder approval, as well as customary
closing conditions. The Company intends to hold a special meeting of its
stockholders as soon as practicable to vote on, among other matters, the
issuance of the second tranche of warrants.

The warrants have an exercise price of $0.25 per share and expire five years
after their date of issuance. The promissory notes mature on December 7, 2004,
and accrue interest at a rate of 12% per annum, of which 4% is payable monthly
and 8% is payable at maturity. The promissory notes are secured by a second lien
on the Company's Blue Dolphin Pipeline System. The maturity date of the
promissory notes will be extended to September 7, 2005, if the Company's
stockholders approve the issuance of the second tranche of warrants. In
connection with this transaction, the directors, certain officers and a large
stockholder, who combined represent approximately 41% of the Company's issued
and outstanding common stock, have agreed to vote in favor of the issuance of
the warrants in the second tranche, among other matters, pursuant to a voting
agreement.

Pursuant to the terms of the agreement, the Company appointed F. Gardner Parker
and Laurence N. Benz to its board of directors and has agreed to grant each of,
subject to stockholder approval, Messrs. Parker and Benz and Michael S.
Chadwick, an existing director, warrants to acquire 100,000 shares of the
Company's common stock with an exercise price of $0.25 per share and a term of
five years. Messrs. Parker and Benz each purchased a promissory note in the
aggregate principal amount of $25,000. Mr. Parker purchased 41,663 warrants, and
will purchase, subject to stockholder approval, 341,665 warrants in the second
tranche. Mr. Benz purchased 41,667 warrants, and will purchase subject to
stockholder approval, 41,667 warrants in the second tranche. Mr. Chadwick
purchased a promissory note in the aggregate principal amount of $12,500,
purchased 20,833 warrants, and will purchase, subject to stockholder approval,
20,834 warrants in the second tranche.

Mr. Chadwick is also a Senior Vice President and a Managing Director of Sanders
Morris Harris Group, Inc. Several of the other investors that purchased
securities in this placement are also affiliates of Sanders Morris Harris.
Additionally, the Company paid Sanders Morris Harris a $25,000 fee in connection
with this transaction and has agreed to retain Sanders Morris Harris as a
financial advisor to identify strategic acquisition opportunities and assist the
Company in evaluating and negotiating the terms of potential strategic
transactions. In connection with its engagement, Sanders Morris Harris will
assist the Company in formulating, evaluating and implementing possible
alternatives for enhancing stockholder value.

Additionally, in August 2004, we restructured existing indebtedness to a vendor
in the amount of $668,000 originally due in September and October 2004 to be
payable in twelve monthly installments of $55,667 beginning September 1, 2004,
plus interest on the outstanding balance at the rate of six percent per annum.
The Company expects to use the proceeds from this offering for working capital
and general corporate purposes. Without this financing, the Company expected to
exhaust its cash and working capital during the fourth quarter 2004. The Company
now believes that the proceeds from this offering will satisfy its working
capital requirements through the first quarter 2005. However, the Company will
still need to obtain additional capital to satisfy its cash and working capital
requirements past the first quarter 2005. The Company has been seeking financing
and selling



assets over the past several years to provide cash to meet obligations
associated with the abandonment of an offshore oil and gas property and for its
operating activities. Ivar Siem, Chairman of the Company, welcomes the addition
of Messrs. Parker and Benz to the Board and said that "the financing will allow
the Company to continue to operate and pursue the portfolio of opportunities
currently being evaluated ".

The securities offered and sold in the private placement have not been
registered under the Securities Act of 1933, as amended, and may not be offered
or sold in the United States absent registration or an applicable exemption from
the registration requirements of the Securities Act. As part of the terms of the
private placement, the Company is obligated to file a registration statement to
register for resale under the Securities Act the shares of common stock
underlying the warrants issued in the private placement.

The Company intends to file a proxy statement with the Securities and Exchange
Commission (the "SEC") in connection with a special meeting of stockholders (the
"Special Meeting") to vote on (i) the proposed issuance of the second tranche of
1.55 million warrants to purchase shares of the Company's common stock, (ii) the
issuance of warrants to certain of the Company's directors (iii) the election of
directors, and (iv) the amendment and restatement of the Company's certificate
of incorporation. In conjunction with the transaction, the directors, certain
officers and a large stockholder of the Company, who combined represent
approximately 41% of the Company's outstanding common stock, have agreed to vote
in favor of the issuance of the second tranche of warrants and other matters
pursuant to a voting agreement with the investors. The Company and certain other
persons named below may be deemed to be participants in the solicitation of
proxies to approve these proposed matters. Participants in this solicitation may
include the directors of the Company (Laurence N. Benz, Michael S. Chadwick,
Harris A. Kaffie, F. Gardner Parker, Ivar Siem and James M. Trimble); and the
executive officers of the Company (Mr. Siem, Michael J. Jacobson and G. Brian
Lloyd). As of September 8, 2004, except for (i) Mr. Parker who may be deemed to
beneficially own approximately 40.7% of the Company's outstanding common stock,
(ii) Mr. Siem who may be deemed to beneficially own approximately 14.1% of the
Company's outstanding common stock, (iii) Mr. Kaffie who may be deemed to
beneficially own approximately 11.8% of the Company's' outstanding common stock,
and (iv) Mr. Jacobson who may be deemed to beneficially own approximately 2.9%
of the Company's outstanding common stock, no participant may be deemed to
beneficially own more than 1% of the Company's outstanding common stock.
Additional information about the interests of the Company's directors and
officers is contained in the Company's annual report on Form 10-KSB/A for the
fiscal year ended December 31, 2003 filed with the SEC and will be in the proxy
statement to be filed with the SEC in connection with the Special Meeting.

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.

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 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.