Oilsands Quest Updates on 3-Site Testing at Axe Lake Discovery


Axe Lake, Saskatchewan
(Click to Enlarge)

Oilsands Quest has provided an update on its reservoir test program at its Axe Lake Discovery in northwest Saskatchewan, as well as its Liquidity.

Axe Lake Discovery - Reservoir Test Program

Oilsands Quest's reservoir test program is proceeding at its three sites within the Axe Lake Discovery area in northwest Saskatchewan. Drilling and construction continue on Test Site 1 and the heating test program at Test Site 3 has commenced.

"The start-up of Test Site 3, which uses electric heat, is just the first step towards capturing critical effective reservoir properties at a field scale level to calibrate our reservoir simulator and maximize the efficiency of the steaming tests on the vertical test holes at Test Site 1," said Jamey Fitzgibbon, President and Chief Operating Officer "We are pleased with our overall progress and results to-date and we will continue to effectively execute our long-term plans as well as continue to demonstrate financial prudence in containing our expenditures to meet these objectives."

Test Site 3

To date, two vertical holes have been drilled and the supporting infrastructure has been constructed. One vertical test hole is equipped with an electric heater to provide heat to the reservoir. The second test hole is equipped with sensors to allow for measurement of the heat transfer and mobilization of the bitumen. The program is designed as a short-term heating program intended to capture critical reservoir properties. Heating of the reservoir was initiated on October 25 and results to date are in line with expectations. The data gathered will provide Oilsands Quest with the necessary in-situ reservoir performance data to be used for simulation modeling in preparation for initial steam injection at Test Site1.

Test Site 1

The drilling of 8 vertical test holes, including two water source wells is now complete. Procurement of key equipment and construction of water treatment, steam generation and extraction collection facilities to support related Test Site activities is near completion. In addition, we have now completed drilling of the three 750-metre horizontal wells (300 metres at the bottom of the reservoir) which will be utilized in Phase Two of our test programs at Test Site 1. First steam injection at Test Site 1 is expected to begin in early 2009. Water and steam will be injected into the reservoir to place heat at the bottom of the McMurray formation using the vertical test holes in order to mobilize the bitumen.

Test Site 2

At Test Site 2, front-end engineering and design work on a facility for tests using mobilization agents other than steam is nearing completion.

Liquidity

Oilsands Quest is currently focused on effectively conducting the vertical hole test program (Phase One) at Test Site 1, maintaining capital discipline with a focus on capital preservation while maintaining an aggressive exploration program. At the present time, the Company believes it has sufficient funding to effectively conduct the planned vertical hole test program at Test Site 1, to meet its flow-through renunciation commitments resulting from the equity financing completed in early October and continuing to maintain its core operations for the next 18 months.
 

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