Blue Dolphin Energy Wins Galveston Area Block 287

Blue Dolphin Energy Company was the high bidder on Galveston Area Block 287 at the OCS Western Gulf of Mexico lease sale #187. The Company will own a 50% working interest in the block if the bid is approved by the MMS. The other 50% would be held by Fidelity Exploration & Production Company, a subsidiary of MDU Resources Group, Inc.. Galveston Area Block 287 is located approximately 33 miles from Freeport, Texas in approximately 65 feet of water, and is near other leases that the Company has interests in. The Company's Blue Dolphin Pipeline runs through the lease block.

Fourteen other lease blocks near the Blue Dolphin Pipeline also received bids at the sale. This represents an increase in the number of blocks receiving bids over previous years, and supports an increased activity level by oil and gas companies in the vicinity of the Company's pipeline. However, the Company has no control over when or if these blocks will be drilled.