CALGARY, April 16 /PRNewswire-FirstCall/ - Oilsands Quest Inc. (Amex:
BQI -
News) announces that the 2007/08 winter exploration program in the field concluded on March 26, 2008. The program demonstrated continued success on the company's contiguous oil sands exploration lands in Saskatchewan and Alberta. Overall, a total of 175 holes were drilled with 150 in Saskatchewan and 25 in the company's first exploration program conducted on its adjacent land holdings in Alberta. Evaluation of core and other data from these holes is being conducted. As anticipated, the drilling results continue to show continuity of bitumen resources over a large area. The drilled portion of the original Axe Lake Discovery area has increased in size from 36 sections (36 square miles) to 65 sections (65 square miles) as a result of the winter 2007/08 program. The exploration drilling in Alberta was completed over 24 sections (24 square miles). Of the 175 holes drilled, 155 were exploration and delineation holes in Saskatchewan and Alberta of which 103 encountered meaningful intercepts of bitumen-bearing McMurray formation (67 percent). The 175 holes drilled a total of 35,000 meters (114,850 feet).
Results of Saskatchewan drilling program Winter Drilling Program Drilled to Date (Sept.14/07 to Mar.26/08) (Nov.22/05 to Mar.26/08) ------------------------------------------------------------------------- Wells Wells Wells Sections per Wells Sections per Drilled Drilled Section Drilled Drilled Section ------------------------------------------------------------------------- Axe Lake Discovery Area 125 65 1.92 264 65 4.06 Saskatchewan Exploration 5 5 1.00 40 30 1.33 Reservoir Test 4 n/a n/a 4 n/a n/a Environmental Monitoring 16 n/a n/a 16 n/a n/a ------------------------------------------------------------------------- Total Saskatchewan 150 70 1.86 324 95 3.20 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Of the 125 holes drilled in the winter 2007/08 program in the Axe Lake Discovery area, 88 were delineation holes, of which 65 encountered meaningful intercepts of bitumen-bearing McMurray formation (74 percent). The previously released estimates of Discovered Resources were based on drilling conducted up to March 31, 2007 within the 36 section area. The depths, thickness and observed reservoir quality of the formation were consistent with previous results. The tight drilling density in the Axe Lake Discovery area further enhances management's confidence in the bitumen resource and its understanding of the depositional environment. Those holes that did not intercept bitumen, were generally delineating the edge of Quaternary channel erosional features commonly found in the McMurray formation. Evaluation of drilling results and data from the 3D seismic program over the three main reservoirs will assist in determining the parameters for delivering a commercially viable bitumen development.
The remaining 37 holes drilled in the Axe Lake Discovery area in the winter 2007/08 program were exploration holes, of which 18 encountered meaningful intercepts of bitumen-bearing McMurray formation (49 percent). These exploration holes extend the drilled Axe Lake Discovery area from 36 sections to 65 sections. This part of the program identified the continuity and extent of the oil sands and expanded the knowledge of the geologic framework of the adjacent lands to the north and east of the original Axe Lake Discovery area.
Preparations for Oilsands Quest's reservoir field test program in the Axe Lake Discovery area began during the winter 2007/08 program period and will continue in May or June. Phase One of the Axe Lake Discovery test program will consider up to three test sites (with varying overburden and pay thickness) with one vertical steam injection well and five vertical observation wells per test site. Steam injection is planned for September 2008 on Test Site #1 and towards the end of 2008 on Test Sites #2 and #3 if appropriate. The purpose of Phase One is to measure resource specific heat and fluid movement under specific operating conditions on a field scale to complement our on-going simulation and laboratory analysis programs. Phase One has received regulatory approval. Phase Two of the Axe Lake Discovery test program will consider expanding the three test sites with horizontal wells and/or injecting mobilization agents other than steam. Current plans call for placement of horizontal wells early next year and injection thereafter. The purpose of Phase Two is to evaluate and analyze information gathered from Phase One regarding mobilization agents and to measure field scale response using horizontal wells. Phase Three of the Axe Lake Discovery test program is currently in the scoping phase where the options being considered range from a continued reservoir test program to a technology feasibility pilot to a full commercial demonstration project.
This past winter, four reservoir test wells were drilled at Reservoir Test Site #1 and ten, 1,000 barrel, heated liquid storage tanks were delivered. Other critical components, such as test and control equipment and steam generation facilities are scheduled for delivery starting in June. Oilsands Quest will continue construction of the test facilities on Test Site #1 in May or June 2008 and expects initial steam injection into the reservoir Test Site #1 to begin late summer 2008.
An additional 16 environmental wells were drilled in the Axe Lake Discovery area for ground water monitoring purposes. These wells are not included in core hole drilling statistics as they are drilled and completed for a specific purpose. These wells are critical in identifying and determining the ground water conditions of the company's discovery area and are necessary for our baseline environmental surveys and will form part of our overall environmental assessments.
Results of Alberta drilling program Winter Drilling Program Drilled to Date (Sept.14/07 to Mar.26/08) (Nov.22/05 to Mar.26/08) Wells Wells Wells Sections per Wells Sections per Drilled Drilled Section Drilled Drilled Section Alberta Exploration 25 24 1.04 25 24 1.04 ------------------------------------------------------------------------- Total Alberta 25 24 1.04 25 24 1.04 -------------------------------------------------------------------------
The Alberta winter 2007/08 drilling program began January 10, 2008 and included the first exploration holes on Oilsands Quest's contiguous lands in Alberta. Prior to the company's 2007 seismic program, these lands had not been explored. Of the 25 holes, 18 encountered meaningful intercepts of McMurray formation (72 percent) at depths of 113 metres (371 feet) to 227 metres (745 feet). The thickness of the bitumen-bearing formation was observed to be between 7 metres (23 feet) and 34 metres (112 feet) with a mean of 15.5 metres (51 feet).
The Alberta drilling program demonstrated continuity of oil sands characteristics extending from Oilsands Quest's Axe Lake Discovery in Saskatchewan westward into Alberta (in close proximity to EnCana's Borealis project). Notably, a key success of the program was achieved by the correlation observed between the drilling results and the estimates made based on the company's 2007 2D seismic program.
A report on the reservoir characteristics such as bitumen saturation and net pay will be released in a few months when geophysical log data and core analysis have been correlated and completed.
Other exploration activities
The table below summarizes Oilsands Quest's completed seismic programs. The recently completed 3D seismic programs in Saskatchewan and Alberta were world-scale in size and utilized CGG Veritas' highest quality, three-component 3D technology. The 1,693 kilometres (1,053 miles) of lines cut for the 3D program were low-impact and environmentally friendly. The 3D program covered over 24 square kilometres (15 square miles) in Saskatchewan and 10 square kilometres (6 square miles) in Alberta. The data from this program has been processed and interpretation of the data is now being completed.
Seismic Surveys Saskatchewan Alberta Km Miles Km Miles 2D 48 30 106 66 3D 1,192 741 501 312 ------------------------------------------------------------------------- Total 1,240 771 607 378 -------------------------------------------------------------------------
Oilsands Quest was able to begin its Saskatchewan winter drilling program earlier than the general industry (in September 2007) because of the infrastructure the company has created and its ability to comply with Saskatchewan's environmental and drilling regulations.
During the winter, two camp facilities were operated by the company in Saskatchewan. The South Camp is now closed for the season. The Base Camp is still open and functional. Weather permitting, activities are expected to resume sometime in May or June.
Update on estimation of bitumen resources
Oilsands Quest is committed to complying with the evolving regulatory requirements regarding resource and reserve reporting in matters such as resource classification and terminology, including the new rules governing disclosure of resource estimates set forth in December 2007 amendments to National Instrument 51-101. The company believes its activities this past year have been successful in discovering additional resources in both Alberta and Saskatchewan and Oilsands Quest is working with its independent evaluators to prepare an estimate of such resources in accordance with the framework mandated by National Instrument 51-101. The company intends to provide an updated estimate which will reflect the data obtained from the 2007/08 winter program when it has completed consultations with its independent evaluators.
About Oilsands Quest
Oilsands Quest Inc. is aggressively exploring Canada's largest holding of contiguous oil sands permits and licences, located in Saskatchewan and Alberta, and developing Saskatchewan's first global-scale oil sands discovery. It is leading the establishment of the province of Saskatchewan's emerging oil sands industry.