Oilsands Quest's business is subject to various federal, provincial and local laws and governmental regulations that may be changed from time to time in response to economic or political conditions.

In Saskatchewan, the legislated mandate for the responsible development of the province's oil and gas resources is set out in The Department of Energy and Mines Act that provides the Minister with the responsibility for the exploration, development, management and conservation of non-renewable resources. The Oil and Gas Conservation Act allows the orderly exploration for, and development of, oil and gas in the province and optimizes recovery of these resources. In May 2007, the Government of Saskatchewan announced new regulations for oil sands and oil shale resources that are intended to encourage more exploration of the province's oil sands and oil shale resources. The new regulations are an update of regulations approved over 40 years ago. Under The Petroleum and Natural Gas Amendment Regulations 2007, oil sands and oil shale mineral rights will be available under the competitive bid and work commitment bid processes, respectively. Previously issued oil sands and oil shale dispositions (including those of Oilsands Quest Inc.) will continue to be administered under amended provisions to The Oil Shale Regulations, 1964 that have also been updated to today's technical and economic realities. As the only oil sands permit holder at the time of the amendments, Oilsands Quest Inc. was pleased to be "grandfathered" under the new regulations.

In Alberta, oil sands activities are legislated under the Mines & Minerals Act which governs the management and disposition of rights in Crown-owned mines and minerals, including the levying and collecting of bonuses, rental and royalties. The Oil Sands Conservation Act establishes a regulatory regime and scheme of approvals administered by the Alberta Energy Utilities Board for the development of oil sands resources and related facilities in Alberta. The Acts are supported by the following regulations: Oil Sands Tenure Regulation, Oil Sands Royalty Regulation 1984, Oil Sands Royalty Regulation 1997, Experimental Oil Sands Royalty Regulation, Oil Sands Conservation Regulation, and Mines and Minerals Administration Regulation.

Regardless of provincial jurisdiction, Oilsands Quest is required to comply with the environmental guidelines and regulations established at the federal, provincial and local levels for its field activities and access requirements on its permit lands and leases. Any development activities, when determined, will require, but not be limited to, detailed and comprehensive environmental impact assessment studies and approvals of federal, provincial and local regulators. Each provincial jurisdiction also maintains specific royalty regimes that will be applied to all oil sands and oil shale development projects consistent with other resource developments.