Also continuing is the battle for control of the Libyan capital of Tripoli. Rebels battled forces loyal to Gadhafi on the streets Thursday. They have seized control of the airport, but still experience shelling from forces loyal to Gadhafi.
An intense gun battle erupted outside the Corinthia Hotel where many foreign journalists are staying. The rebels are struggling to take complete control of Tripoli, four days after they swept into the capital and sparked the collapse of Gadhafi's regime.
A spokesman for Gadhafi told the Associated Press that the dictator is in Libya leading the fight against the rebels, and that he is safe, healthy and his morale is high. However the spokesman didn't disclose the Gadhafi's whereabouts.
U.S. officials say they're using their satellites, drones and other spy-tools to help hunt Gadhafi down, and NATO intelligence and reconnaissance assets are also being used. Rebels stormed his compound in Tripoli on Tuesday, but he was not there.
There are suspicions that Gadhafi may have gone underground. The search is on for a network of underground tunnels built as escape routes in Tripoli.
The $2 million bounty comes from Libya's Transitional National Council, which says Gadhafi is wanted dead or alive.
But the autocrat has refused to surrender, fleeing to an unknown destination as his 42-year regime crumbles in the North African nation. Speaking to a local Libyan television channel Wednesday, apparently by phone, Gadhafi vowed from hiding to fight on "until victory or martyrdom."
Meanwhile, the United Nation Security Council is expected to release $1.5 billion in frozen assets on Thursday, sending badly needed funds back to the people of Libya.
Rebels say one of their key targets now is Gadhafi's hometown of Sirte, about 250 miles from Tripoli, but acknowledged that capturing that city would not be easy because Gadhafi's fellow tribesmen were expected to put up a fierce fight.
Opposition leaders have said they were trying to negotiate a peaceful surrender of the city.
The Associated Press contributed to this story.