Oilsands Quest forms technology company, updates Axe Lake activities

    Amex:   BQI

    CALGARY, Jan. 10 /CNW/ - Oilsands Quest Inc. (Amex:   BQI) today announced
the formation of a subsidiary company devoted to in-situ oil sands technology
assessment and development. The company also provided an update of recovery
development and operations activities for its Axe Lake Discovery in northwest

    Oilsands Quest Technology Inc.

    Dr. Erdal Yildirim, who is Oilsands Quest's Executive Vice President,
Project Development, has been appointed President of Oilsands Quest Technology
Inc, a wholly owned subsidiary of Oilsands Quest Inc.
    "The progress in development of oil sands technologies has been a
significant driver in the growth, prosperity and environmental sustainability
of the oil sands industry" said Dr. Yildirim, "yet it remains a relatively
young industry, where a new wave of technological advancements is occurring
through improvements to existing technologies, commercialization of emerging
technologies and creation of new technologies generated by novel process
    Oilsands Quest Technology has been created to be at the forefront of this
technology wave, to maximize the value of its oil sands and oil shale assets
and to generate new business opportunities. This will be accomplished by
utilizing its in-depth technology expertise for testing and developing
technologies most suitable to the characteristics of its natural resources.
    Widely recognized within the industry for his leadership, experience and
technical expertise, Dr. Yildirim has served in many managerial and executive
capacities in the oil sands industry. He was the co-founder and chairman of
the National Oil Sands Task Force during the period of 1993 to 1996 and was
the co-founder and, since 1994, has been the Managing Director of the Canadian
Oil Sands Network for Research and Development (CONRAD).

    Axe Lake Recovery development program

    Drilling to date within the Axe Lake Discovery area has confirmed three
reservoirs for potential development. The three reservoirs, of roughly equal
size, contain the majority of Axe Lake's Discovered Resources. These
reservoirs are the focus of Oilsands Quest's recovery development and
production planning efforts.
    In an extensive program of laboratory testing and reservoir simulation
studies, Oilsands Quest, its technical consultants and its financial advisors
are evaluating existing in-situ recovery techniques. These efforts have
provided the initial definition of the field test program to evaluate
reservoir response to varying temperatures and pressures of steam and steam
with solvents. A program of reservoir testing at three sites within the Axe
Lake Discovery is planned for the first half of 2008, subject to regulatory
approval. The reservoir tests will provide up to 600 barrels per day of
initial bitumen volumes in 2008 that will contribute data to the design of an
in-situ test program of up to 10,000 barrels per day that is planned for
start-up in 2009, subject to regulatory approval.

    Camp operations update

    Oilsands Quest is operating two camps in Saskatchewan to support its
winter 2008 drilling, seismic and reservoir testing activities. The Base Camp
will accommodate up to 200 personnel and is located on the main access road
adjacent to the company's 5,000-foot (1500-metre) airstrip in the northeast
corner of the Axe Lake Discovery area. The new South Camp will accommodate up
to 250 people and is located in Saskatchewan near the Alberta border, 12 miles
(19 km) southwest of the Base Camp. It will provide support to operations in
both Alberta and Saskatchewan. Drilling has commenced in Alberta on the
company's permit lands. During the winter season, manpower is expected to peak
at approximately 450 personnel.

    About Oilsands Quest Inc.

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

    Forward-looking information

    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 discovered
and undiscovered resources estimates, references to Oilsands Quest's
exploration, technical and development programs and future discoveries are
based on the opinions and estimates of management and Oilsands Quest's
independent evaluators at the date the statements are made and are subject to
a variety of risks and uncertainties and other factors 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, exploration and technical risks inherent 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
programs 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-KSB 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: 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

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