Oilsands Quest reports new findings to support reservoir testing at Axe Lake



    Amex:   BQI

    CALGARY, July 9 /CNW/ - Oilsands Quest Inc. (Amex:   BQI) reports that
positive results of advanced laboratory testing and computer simulation
studies support the company's reservoir field test program using steam-based
production methods that have been scheduled for late summer 2008 at Test
Site 1. These results are another step toward full commercial project
development, including assessment of a "fast-track" approach to a first
prospective project.
    The results of the studies by industry-leading experts, which have been
on-going for the past two years, are being used to finalize details of the
reservoir field test program. The reports also support the views of Oilsands
Quest's technical and management teams regarding the in-situ production
potential of the Axe Lake Discovery located in northwest Saskatchewan near the
Alberta border. "These new results combined with earlier reports confirm
McDaniel & Associates assessment that this is a remarkable reservoir, with
permeabilities as high as any other in the industry," said Christopher
Hopkins, President and CEO.
    Oilsands Quest has selected industry-leading experts who specialize in
reservoir structural analyses, petro-physical characteristics and production
simulation testing including companies such as Hycal, Gushor and Schlumberger.
    Hycal Energy Research Laboratories Ltd. provided its report to the
company on the results of its advanced laboratory testing. Based on
examination and testing of Oilsands Quest's cores from drilling at Axe Lake in
2007, the analysis concludes that linear coreflood recovery factors as high as
approximately 90 percent are indicative of the potential to achieve relatively
high recovery factors in the field. Hycal also reports that there is good
potential for production of bitumen utilizing low to moderate pressure steam,
steam with solvent injection and hot-water-flood. Formed in Calgary in 1976,
Hycal Energy Research Laboratories Ltd. is a specialized research and
consulting laboratory focused on reservoir optimization (reservoir
engineering).
    Gushor Inc. also reported results from computer modeling and simulations
of reservoir performance at the Axe Lake test sites related to how fast steam
rises in the reservoir under different steam injection pressures. The work
demonstrates that there are potential operating strategies in which energy
loss to the overburden can be delayed or avoided by controlling the steam
injection pressure. In addition, hot-water-flood strategies can improve
control of energy distribution within the reservoir. Gushor Inc. is a
geochemical engineering analysis company that provides geochemical and
reservoir engineering solutions by integrating geology, fluid geochemistry and
reservoir simulation.
    Schlumberger Canada Limited added its views with a report reporting its
results from its computer modeling and simulation testing of the Axe Lake
reservoir on the ability to monitor and control vertical and horizontal steam
growth within the reservoir, demonstrating that fluid communication can be
established between the injector well and an observation well without steam
rising vertically to the top of the pay zone. Schlumberger is the world's
largest oilfield services provider, helping customers improve exploration and
production performance.
    Oilsands Quest believes that the advanced laboratory test results and
simulation studies, along with the recent McDaniel & Associates independent
resource estimate report indicating that significant portions of the
discovered and undiscovered bitumen resources at Axe Lake and Raven Ridge are
potentially recoverable using existing demonstrated technologies, provide a
reasonable representation of the expected behavior of the reservoir during the
field test program.
    At the present time, construction and other preparations at Test Site 1
are proceeding on schedule, including the delivery of equipment for steam
generation and water treatment.
    Oilsands Quest notes that the U.S. Securities and Exchange Commission
("SEC") does not permit the inclusion of reserves other than proved reserves
in documents filed with the SEC.

    About Oilsands Quest

    Oilsands Quest Inc. is applying its technical expertise to develop
multiple global-scale discoveries while aggressively exploring Canada's
largest contiguous oil sands land holding. The company (www.oilsandsquest.com)
is the originator of Saskatchewan's emerging oil sands industry.

    Forward-looking statements

    Except for statements of historical fact relating to Oilsands Quest, this
news release contains certain "forward-looking information" within the meaning
of applicable securities law. Forward-looking information is frequently
characterized by words such as "plan", "expect", "project", "intend",
"believe", "anticipate", "estimate", "potential", "prospective" and other
similar words, or statements that certain events or conditions "may", "will",
or "could" occur. Forward-looking statements such as references to Oilsands
Quest's reservoir field test program and recovery factors in the field are
based on the opinions and estimates of management at the date the statements
are made and are subject to a variety of risks and uncertainties that could
cause actual events or results to differ materially from those anticipated in
the forward-looking statements. These risks, uncertainties and other factors
include, but are not limited to, technical risks inherent in construction
projects in the oil sands industry, regulatory and economic risks, lack of
infrastructure in the region in which the company's resources are located and
risks associated with Oilsands Quest's ability to implement its business plan.
There are uncertainties inherent in forward-looking information, including
factors beyond Oilsands Quest's control, and no assurance can be given that
the construction of the facilities and the execution of the test program will
be completed on time, on budget or at all. Oilsands Quest undertakes no
obligation to update forward-looking information if circumstances or
management's estimates or opinions should change, except as required by law.
The reader is cautioned not to place undue reliance on forward-looking
statements. The risks and uncertainties set forth above are not exhaustive.
Readers should refer to Oilsands Quest's current annual report on Form 10-K
and other document filings, which are available at www.sedar.com and at
www.sec.gov for a detailed discussion of these risks and uncertainties and
details regarding the location and extent of Oilsands Quest's land holdings.





For further information:

For further information: Paul K. O'Donoghue, Vice President, Investor
Relations and Corporate Planning, Email podonoghue@oilsandsquest.com; General
inquiries and retail investors, contact Hedlin Lauder Investor Relations Ltd.,
Toll Free 1-800-299-7823, Office (403) 232-6251, Email
irinfo@hedlinlauder.com; Institutional investors, contact BarnesMcInerney
Inc., Toll Free 1-866-794-7288, Office (416) 371-0510, Email
oilsands@barnesmcinerney.com

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Oilsands Quest Inc.

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