IRVINE, CA -- (MARKET WIRE) -- 08/29/06 -- BlueFire Ethanol, Inc. (PINKSHEETS: BFRE) signed an LOI with Petro-Diamond, Inc. (PDI) to purchase the ethanol produced from BlueFire's first North American Biomass-to-Ethanol conversion facility located at a Southern California landfill as announced last week.

Petro-Diamond, Inc. is a significant blender of denatured ethanol into motor fuel in Southern California. Ethanol is currently blended year-round at PDI's terminal facility located in Long Beach, California. On average, they purchase over 50,000 gallons of ethanol per day.

"In striving to eliminate the commodity risks that have always plagued the traditional ethanol producers we have focused on two key elements of our development plan. BlueFire, by using waste as a feedstock, has eliminated the risk that traditional producers encounter while supplying their process with a commodity such as corn or sugarcane as a feedstock. The other key element to our plan is to decrease the volatility of our end product sales by striving to 'lock-up' the price variances an ethanol producer would typically encounter. The agreement with PDI enables us to do what we do best, profitably convert green waste and other cellulosic waste into ethanol."

"We're excited about working with BlueFire Ethanol in the future," stated Michael Dougherty, General Manager of Petro-Diamond. "BlueFire's waste to ethanol manufacturing process provides us with a cost advantage that will help keep PDI competitive in this dynamic industry."

U.S. oil consumption has climbed to a record high of 7.6 billion barrels per year, with 38% of all imported oil originating from the Middle East. "Maximizing energy efficiency and renewable energy is the domestic epicenter in the war on terror, and it is imperative that we maximize the partnerships between the public and private sectors in new and creative ways with a sense of seriousness, national purpose, and the urgency the situation merits," commented U.S. Department of Energy Assistant Secretary Alexander Karsner at the recent Power-Gen Renewable Energy and Fuels Conference.

The renewable multi-year agreement between BlueFire and PDI provides for floor and ceiling pricing for the ethanol based on a reasonable discount from the previous months Los Angeles average rack price and subject to escalation.

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About Petro-Diamond

Petro-Diamond Inc. is a wholly owned subsidiary of Mitsubishi Corporation. Established in 1983, PDI's principal function is to expand Mitsubishi's role in petroleum product trading in the western hemisphere, primarily in the United States. The administrative location, headquartered in Irvine California, is also responsible for all product trading from the U.S. West Coast and Western Canada and operates a modern waterborne terminal facility in Long Beach, California.

About us:

BlueFire Ethanol, Inc. is established to deploy the commercially ready, patented, and proven Arkenol Technology Process for the profitable conversion of cellulosic ("Green Waste") waste materials to ethanol, a viable alternative to gasoline. BlueFire's use of the Arkenol Process Technology positions it as the only cellulose-to-ethanol company worldwide with demonstrated production of ethanol from urban trash (post-sorted MSW), rice and wheat straws, wood waste and other agricultural residues. Our goal is to develop and operate high-value carbohydrate-based transportation fuel production facilities worldwide. These "biorefineries" will convert widely available, inexpensive, organic materials such as agricultural residues, high-content biomass crops, wood residues, and cellulose from MSW into ethanol. BlueFire intends to build a multinational company that leads the world in producing biobased transportation fuels. Its business will encompass development activities leading to the construction and long-term operation of production facilities while maintaining technological advantage and ownership of the process technology and all its improvements. Ethanol will be produced from biorefinery facilities opportunistically constructed on or near landfills, waste collection and waste separation sites. Each facility will deploy the proprietary technology, which uses all cellulosic waste materials traditionally disposed of in landfills as feedstock. www.BlueFireEthanol.com

FORWARD-LOOKING-STATEMENTS

Statements about BlueFire Ethanol, Inc.'s expectations, including future revenues and earnings, and all other statements in this press release other than historical facts are "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as the term is defined in the Private Litigation Reform Act of 1995. BlueFire's actual results could differ materially from expected results. BlueFire undertakes no obligation to update forward-looking statements to reflect subsequently occurring events or circumstances. Should events occur which materially affect any comments made within this press release; BlueFire will appropriately inform the public.

Investment Banker:
Tom Rubin
President/CEO
Westcap Securities, Inc.
18201 Von Karman Ave. Suite 550
Irvine, CA 92612
800-805-3334
www.WestcapSecurities.com

Investor Relations Contact:
Gerald Kieft
or
Ryan Audin
Wall Street Resources, Inc.
2646 SW Mapp Road, Suite 303
Palm City, Florida 34990
772-219-7525
http://www.wallstreetresources.net