ALBERTA OILSANDS INC.

Attention Business Editors

Alberta Oilsands Inc. submits Clearwater West SAGD Project application

/NOT FOR DISTRIBUTION TO THE U.S.A. NEWS WIRE SERVICES OR FOR

DISSEMINATION TO THE U.S.A./

CALGARY, Jan. 18 /CNW/ - Alberta Oilsands Inc. (the "Company" or "AOS")

announces that it has submitted a Clearwater West Low Pressure Steam Assisted

Gravity Drainage Pilot Project application to the Energy Resources

Conservation Board ("ERCB") and Alberta Environment ("AE") for approval. The

project is located in the southwest quarter of Section 22 Twp 088 R08W4,

approximately one mile southeast of the Fort McMurray Regional Airport. The

location is ideally situated as it is in close proximity to abundant services

and infrastructure that would facilitate the rapid construction of the

facilities, following the approval of the application by the ERCB and AE.

The application is a comprehensive document that is designed to address

all of the rigorous requirements to be met prior to approval of a project of

this size. These include geological data from the drilling of 22 core holes,

detailed cap rock studies, reservoir simulation studies, horizontal well

designs, front-end engineering design for the project facilities and

infrastructure, environmental impact and emergency response, including surface

environmental and brackish source water studies, and public consultation plan.

The project has a design production capacity of 715 m3/day (4,500 barrels

per day (bpd)) of bitumen, coming from six (6) horizontal well pairs. The

"stacked" well pair configuration comprises two layers of three parallel

horizontal well pairs each, one layer located near the base of the McMurray

Formation and the second layer located approximately halfway in the depth of

the reservoir. A low pressure solvent co-injection scheme is planned for the

lower layer of wells. The upper layer of wells is intended to have low

pressure steam injection only with the potential application of

electro-magnetic heating technology.

The objectives of the project are to demonstrate the producibility and

operating characteristics of the thick, bitumen saturated McMurray Formation

in the project area. It is also to demonstrate feasibility and operational

safety aspects of in-situ bitumen recovery in the Clearwater area and in

proximity to the Fort McMurray Regional Airport.

The original submission date of Q3 2009 was deferred due to the inclusion

of the "stacked" well pair configuration. The doubling of the number of well

pairs in the pilot required recalculation and re-engineering of the pilot

surface facilities, reservoir simulation model, process parameters and the air

and noise modeling related to the environmental assessment work.

"The submission of the application is a significant step in a series of

milestones that AOS has set along the path to achieve the goal of commercial

bitumen production. This submission moves AOS one step closer to its vision of

a 10,000 barrel per day project at the Clearwater West property," said Shabir

Premji, Executive Chairman.

The pilot project application will be available on AOS' website at

www.aosapplication.com and on the ERCB website www.ercb.ca.

About AOS

Alberta Oilsands Inc. is a technically driven high growth energy company

focused on the development and conversion of the Company's oil sands resources

to reserves and the creation of long term sustainable value by increasing

production and cash flow on relevant conventional oil and natural gas assets.

Forward-Looking Statements and Information: This press release contains

certain forward-looking statements and information ("forward-looking

statements") within the meaning of such statements under applicable securities

law including management's assessment of the Company's properties, production

and prospects. Forward-looking statements are frequently characterized by

words such as "plan", "expect", "project", "intend", "believe", "anticipate",

"estimate", "may", "will", "potential", "design", "predict", "proposed" and

other similar words, or statements that certain events or conditions "may" or

"will" occur. In particular, this news release contains forward-looking

statements and information with respect to: (i) the ability of the Company to

receive the necessary regulatory approvals in respect of its Clearwater West

LP SAGD Pilot application in a timely manner, or at all; (ii) the ability of

the Company to raise the necessary funds to proceed with the development of

its Clearwater West LP SAGD Pilot; and (iii) the results and timing of

development in respect of the Company's Clearwater West LP SAGD Pilot

(including in respect of estimated design capacities and simulated production

numbers). These statements are only predictions. Forward-looking statements

are based on the opinions and estimates of management 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 projected in the forward-looking statements. These

factors include the inherent risks involved in the exploration and development

of oil sands and properties, the uncertainties involved in interpreting

drilling results and other geological data, uncertainties relating to the

ability of the Company to receive the necessary regulatory approvals in

respect of its Clearwater West LP SAGD Pilot application, uncertainties

relating to the technologies associate with the Clearwater West LP SAGD Pilot

and whether the results of the Clearwater West LP SAGD Pilot will meet

designed capacities and simulated production numbers once operational,

fluctuating oil and gas prices, the possibility of cost overruns or

unanticipated costs and expenses, uncertainties relating to the availability

and costs of financing needed to fund the Clearwater West LP SAGD Pilot, the

possibility that royalties and other government levies could be increased, and

other factors including unforeseen delays. As an oil sands focused enterprise,

the Company faces risks, including those associated with exploration,

development, regulatory approvals, fluctuations in commodity demand and

commodity prices and the ability to access sufficient capital from external

sources. Anticipated exploration and development plans relating to the

Company's properties are subject to change. For a detailed description of the

risks and uncertainties facing the Company and its business and affairs,

readers should refer to the Company's annual financial statements, management

discussion and analysis and annual information form for the year ended

December 31, 2008 as well as the Company's management discussion and analysis

for the period ended September 30, 2009, all of which are available at

www.sedar.com. The Company undertakes no obligation to update such

forward-looking statements or information if circumstances or management's

estimates or opinions should change, unless required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as

that term is defined in the policies of the TSX Venture Exchange) accepts

responsibility for the adequacy or accuracy of this release.

-30-

/For further information: Alberta Oilsands Inc., Suite 2800, 350 - 7th

Avenue S.W., Calgary, Alberta, T2P 3N9; Shabir Premji, Executive Chairman, T:

(403) 232-3341, F: (403) 263-6702,

spremji@aboilsands.ca; or Chad Dust,

Executive Vice President Finance and Business Development, T: (403) 538-3191,

F: (403) 263-6702,

cdust@aboilsands.ca/