HOUSTON, May 17 /PRNewswire-FirstCall/ -- H2Diesel Holdings, Inc. (OTC:HTWO) (BULLETIN BOARD: HTWO) announced today it has entered into Test Burn Agreement with Dynegy Oakland LLC, a subsidiary of Dynegy, Inc (NYSE:DYN) for the purpose of demonstrating its proprietary bio-fuel technology in power generation applications. The Agreement calls for H2Diesel to supply its biofuel for a test program that will be performed at Dynegy's Oakland Power Plant combustion turbine facility, which burns millions of gallons of fuel annually. The test program will include the evaluation of both technical and environmental performance characteristics of H2Diesel's biofuel. The parties have agreed to negotiate with respect to a mutually agreeable purchase agreement for H2Diesel's biofuel in the event testing is successful. David A. Gillespie, President and CEO of H2Diesel, said: "We're excited to have Dynegy, a recognized leader in energy innovation, as the first power plant operator to test our proprietary bioemulsion fuel. We believe our fuel can be used in industrial and power generation applications to reduce United States' dependence on foreign oil, and to reduce the emissions of greenhouse gasses and other pollutants. We anticipate that successful completion of the testing program will pave the way for Dynegy and H2Diesel to open negotiations regarding future purchase of our bio fuel." About H2Diesel Holdings, Inc. H2Diesel is a development stage company that holds an exclusive license for North America, Central America and the Caribbean to proprietary technology for the manufacture of an alternative "bio-fuel" from domestically produced vegetable oils and animal fats that is intended to be marketed as a new class of bio-fuel or fuel additive for power generation, heavy equipment, marine use and as a heating fuel. The Company further believes its proprietary bio-fuel will provide a cheaper, renewable alternative energy source with significantly lower emissions than traditional fuels and a cleaner and more efficient alternative to heating oil. H2Diesel's business model calls for the establishment of bio-fuel production facilities directly and through sublicensing of its technology to qualified licensees. Forward Looking Statements This news release contains forward-looking statements. These forward- looking statements concern the operations, prospects, plans, economic performance and financial condition of H2Diesel Holdings, Inc. (the "Company") and are based largely on the Company's beliefs and expectations. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. The risks and uncertainties related to the Company's business include all the risks attendant a development stage business in the volatile energy industry, including, without limitation, the risks set forth under the caption "Risk Factors" in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006. In particular, any biofuel purchases by Dynegy would be subject to the successful negotiation and execution of a definitive fuel supply contract and construction of commercial production facilities for the Company's biofuel. CONTACT: David Gillespie, President & CEO Rob Schatz H2Diesel Holdings, Inc. Wolfe Axelrod Weinberger 713-973-5720 Associates, LLC 212-370-4500 DATASOURCE: H2Diesel Holdings, Inc. CONTACT: David Gillespie, President & CEO, H2Diesel Holdings, Inc., +1-713-973-5720; Rob Schatz, of Wolfe Axelrod Weinberger Associates, LLC, +1-212-370-4500, for H2Diesel Holdings, Inc.

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