The Parelli Seven Games are going to help you a lot. Groundwork is where it all starts, anyway.
Like already stated, circles are going to be a great idea. You need to teach Blu the importance of impulsion (which is when go equals whoa) and the importance of going on a loose rein. The faster and more anxious he is, the smaller the circle. A circle's consistency will help calm him down. When you feel him relax, go to a bigger circle. Reward the slightest try and change. And if he does anything where you need to bring him back down use one rein to do it, don't pull on both reins. That will only make his tension worse.