Oilsands Quest mobilizing for next phase of exploration activities in Saskatchewan and Alberta



    Amex:   BQI

    CALGARY, Aug. 30 /CNW/ - Oilsands Quest Inc. (Amex:   BQI) is ramping up
exploration activities on its oil sands permits in northwestern Saskatchewan
following the receipt of government approval of three of the four programs
planned for its next phase of operations. The company received approval of its
applications for permits to drill 97 exploratory holes, to undertake
electrical resistance tomography (ERT) surveys and to conduct road maintenance
activities; all of these permits expire March 31, 2008. Approval of the
application for its fourth program, an extensive seismic survey, has not yet
been received by the company.
    The drilling permit allows Oilsands Quest to commence drilling operations
before freeze-up. Two drilling rigs will be utilized for this purpose and are
now being mobilized; they are expected to be on site and ready to begin
drilling by mid-September. Mobilization of the services, personnel and
equipment required to support drilling operations and other exploration
activities is already underway.
    Approvals for extensive 2-D and 3-D seismic programs on Oilsands Quest's
adjacent lands in Alberta have also been received, and these programs are
currently underway.

    Drilling program combines delineation and exploratory drilling

    The Saskatchewan drilling permit is based on drilling up to 70 holes in
the Axe Lake area and another 27 holes along Oilsands Quest's main access
road. The holes in the heart of the Axe Lake area are intended to further
delineate the Axe Lake discovery and to obtain detailed information for
potential field pilot locations. The holes to be drilled along the access road
will test structural targets identified by seismic surveys conducted during
the winter 2006/07 exploration program.
    In total, eight drilling rigs have been committed for drilling operations
between now and the end of March 2008. The winter 2007/08 drilling program is
not expected to begin until late November or early December and will be
dependent on ideal winter drilling conditions. Oilsands Quest plans to submit
an application to expand the current drilling program.
    "Our upcoming program represents the next chapter in the development of
Axe Lake," said Errin Kimball, Oilsands Quest's Vice President of Exploration.
"We are confident that delineation drilling in the Axe Lake area will increase
our knowledge of the reservoir as we assess its potential production
capability. For exploration in other areas of our Saskatchewan permits, we
will use a combination of both 2-D and 3-D seismic and ERT to optimize
exploration drilling."

    The company plans to use the same exploration strategy on its adjoining
permits in Alberta, combining seismic, ERT and drilling to reduce drilling
risk and further accelerate timelines for exploration and field production
testing.

    ERT surveys to help qualify targets identified by seismic

    The purpose of the ERT surveys is to measure the resistivity of
underground structures identified by seismic surveys in order to determine if
the structures contain bitumen or water; they are conducted using small
all-terrain vehicles. The permit to conduct ERT surveys is based on two
stages: the first involves two test surveys of 4.7 line kilometres each, and
the second stage covers up to 100 line kilometres. Interpretation of the
results is then correlated with other exploration data in order to form a
basis for the selection of exploratory drilling locations. The first stage of
the ERT program has already begun.

    Other activities related to gearing up for exploration program

    The third Saskatchewan permit approved for immediate implementation is
related to road maintenance, including the extraction of sand and gravel to
maintain exploration roads and trails. Permits of this nature are applied for
on a program-by-program basis to support other operations on the company's
permit lands. This permit is also tied to the traditional end of the winter
drilling season and expires March 31, 2008.
    In Alberta, the 2-D and 3-D seismic programs will be conducted on lands
adjacent to the company's Axe Lake Discovery in Saskatchewan. Approximately
50 kilometres of 2-D seismic will be undertaken to expand on the seismic
program carried out in March 2007. Approximately 500 kilometres of 3-D seismic
will focus on targets identified in the March 2007 seismic program. These
permits are tied to the end of the winter drilling season and expire April 30,
2008.
    The company's base camp, which can house approximately 100 people, has
remained open and operational since the end of the last winter drilling
program to accommodate maintenance crews and personnel involved in field work
for baseline environmental studies. This fall, Oilsands Quest plans to add
another dormitory unit to the base camp, which will increase its capacity to
approximately 150. The company's other existing camp facility in Saskatchewan,
referred to as south camp, will also be utilized this winter; it can house up
to 70 people.
    A new camp, equivalent in size to the Saskatchewan base camp, will be
established in Alberta to support the company's exploration activities there.

    About Oilsands Quest

    Oilsands Quest Inc. is an energy exploration company aggressively
exploring Canada's largest contiguous oil sands land holding by applying its
technical expertise to develop multiple 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 the company, 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 are based on certain material
factors and assumptions of management believed to be reasonable 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.
The assumptions, risks and uncertainties include but are not limited to risks
inherent in the oil sands industry, regulatory and economic risks, and risks
associated with the company's ability to implement its business plan. Oilsands
Quest Inc. 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 10KSB 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 The
Buick Group, Toll Free 1-877-748-0914, Office (416) 915-0915, Email
jbuick@buickgroup.com

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