Oilsands Quest Resumes Activities for Reservoir Tests at Axe Lake

Oilsands Quest Inc. announces the resumption of field activities associated with preparations for the reservoir field test program at its Axe Lake Discovery in northwest Saskatchewan. Since the end of the 2007/08 winter drilling program on March 26, 2008, most field work has been suspended due to spring breakup. However, off-site work related to the field test program has continued, and site workers have been returning to the Base Camp since mid-May.

At the present time, 45 construction crew personnel are on site preparing Test Site 1 in order to accommodate construction of the test facilities. Operations for Test Site 1 of the reservoir test program will include power generation, steam generation, water processing and handling, fluid recovery and treatment, and the injection of steam and/or hot water into the reservoir. Equipment for these operations has been sourced from a variety of locations in Canada and the United States. Oilsands Quest's operating and engineering personnel recently traveled to Houston to conduct a factory approval test on the steam generation and water treatment equipment.

To date, six 1,000-barrel heated liquid storage tanks have been received at Test Site 1, and two 1,000-barrel heated liquid storage tanks have been delivered to both Test Sites 2 and 3. The preliminary engineering contracts for the surface facilities for Test Site 2 have been awarded and design work has commenced.

The major equipment for steam generation, water treatment and power generation is expected to arrive at the Test Site 1 over the next four to six weeks; most of this equipment will be installed in all-season building structures. Construction of these facilities is expected to be completed approximately eight weeks after the arrival of the major equipment. At the present time, initial steam injection into the reservoir at Test Site 1 is on schedule to occur in late summer 2008.

By the end of this month, Oilsands Quest expects to resume drilling of the wells required for injection and monitoring at the three reservoir test sites, including the remaining two of the six wells at Test Site 1 and wells at Test Site 2 and 3 as appropriate.

The company's Base Camp, which has in excess of 200 beds, remained operational during spring breakup to accommodate personnel involved with the field test program and ongoing baseline environmental studies.