UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                Date of report (Date of earliest event reported):
                                  July 31, 2009

                           Blue Dolphin Energy Company

             (Exact name of registrant as specified in its charter)


          Delaware                     0-15905                  73-1268729
(State or Other Jurisdiction  (Commission File Number)         (IRS Employer
      of Incorporation)                                      Identification No.)

                          801 Travis Street, Suite 2100
                                Houston, TX 77002
              (Address of principal executive office and zip code)


                                 (713) 568-4725
              (Registrant's telephone number, including area code)


                                (Not Applicable)
          (Former name or former address, if changed since last report)


Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2 below):

[]   Written  communications  pursuant to Rule 425 under the  Securities Act (17
     CFR 230.425)

[]   Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

[]   Pre-commencement   communications  pursuant  to  Rule  14d-2(b)  under  the
     Exchange Act (17 CFR 240.14d-2(b))

[]   Pre-commencement   communications  pursuant  to  Rule  13e-4(c)  under  the
     Exchange Act (17 CFR 240.13e-4(c))




Item 1.01.        Entry into a Material Definitive Agreement.

         On July 31, 2009, Blue Dolphin Energy Company ("Blue Dolphin")  entered
into a Loan and Option Agreement (the "Agreement") with Lazarus Energy Holdings,
LLC, a Delaware limited  liability company ("LEH"),  Lazarus Louisiana  Refinery
II, LLC, a Delaware limited liability company ("LLRII"),  Lazarus Energy, LLC, a
Delaware limited liability company, and Lazarus  Environmental,  LLC, a Delaware
limited  liability  company.  The Lazarus entities are collectively  referred to
herein as "Lazarus."

         Under terms of the Agreement,  Blue Dolphin loaned $2,000,000 to LLRII,
evidenced by a promissory note payable to Blue Dolphin (the "Bridge  Loan"),  in
exchange for an option to acquire  certain assets owned by Lazarus.  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 capacity associated with the two facilities. Blue Dolphin's option is
exercisable  by written  notice to LEH at any time  prior to March 1, 2010.  The
consideration for exercise of the option is the issuance of 47,141,196 shares of
Blue  Dolphin's  common  stock to  Lazarus,  which will  constitute  a change in
control.  Closing would be subject to negotiation  of a definitive  purchase and
sale  agreement  that will include  customary  terms and  conditions,  including
approval by Blue Dolphin's stockholders.

         The Bridge Loan, which is non-interest bearing,  matures on January 31,
2010. The Bridge Loan contains customary covenants and requirements.

         The foregoing  description  of the Agreement and the Bridge Loan do not
purport to be complete and is qualified in its entirety by reference to the full
text of the Agreement and the Bridge Loan, copies of which are filed herewith as
Exhibits 10.1 and 10.2 respectively, and are incorporated herein by reference.

Item 7.01.        Regulation FD Disclosure.

         A copy of the press release announcing the Agreement and Bridge Loan is
attached as Exhibit 99.1 hereto and is  incorporated  herein by  reference.  The
information  being  furnished  pursuant  to Item  7.01 of this  Form  8-K and in
Exhibit 99.1 shall not be deemed to be "filed" for the purposes of Section 18 of
the  Securities  Exchange  Act of 1934 (the  "Exchange  Act"),  or  otherwise be
subject to the  liabilities  of that section,  nor shall it be  incorporated  by
reference  into a filing under the  Securities  Act of 1933, as amended,  or the
Exchange Act,  except as shall be expressly  set forth by specific  reference in
such a filing.






Item 9.01.        Financial Statements and Exhibits.

(d) Exhibits.

                  10.1     Loan and Option  Agreement dated July 31, 2009 by and
                           among Lazarus Energy Holdings, LLC, Lazarus Louisiana
                           Refinery  II,  LLC,  Lazarus  Energy,   LLC,  Lazarus
                           Environmental, LLC and Blue Dolphin Energy Company.
                  10.2     Promissory  Note  effective  July 31, 2009 Payable to
                           Blue  Dolphin  Energy  Company by  Lazarus  Louisiana
                           Refinery II, LLC.
                  99.1     Press release dated August 6, 2009.





                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Date:    August 6, 2009

                                                   Blue Dolphin Energy Company

                                                   /s/ THOMAS W. HEATH
                                                   -----------------------------
                                                   Thomas W. Heath
                                                   President and Secretary








                                INDEX TO EXHIBITS


Exhibit Number    Description of Exhibit
--------------    ----------------------

         10.1     Loan and Option  Agreement  dated  July 31,  2009 by and among
                  Lazarus Energy Holdings,  LLC, Lazarus Louisiana  Refinery II,
                  LLC, Lazarus Energy, LLC, Lazarus Environmental,  LLC and Blue
                  Dolphin Energy Company.

         10.2     Promissory  Note  effective  July  31,  2009  Payable  to Blue
                  Dolphin Energy Company by Lazarus Louisiana Refinery II, LLC.

         99.1     Press release dated August 6, 2009.