Calgary, AB, Aug. 31, 2006 (TSX – COS.UN) — Canadian Oil Sands Trust (the “Trust” or “Canadian Oil Sands”) today announced Syncrude introduced bitumen feed into Coker 8-3 during the August 30th night shift as part of a phased approach to return its Stage 3 facilities to operation. Incremental production should commence over the next few days with Syncrude planning for a gradual ramp-up to allow for regular monitoring and testing of the flue gas desulphurization (FGD) and other units.

Investigations into the odours that occurred during the operation of Syncrude’s new FGD unit and coker in May determined that ammonia being used in the FGD was largely responsible. Analysis indicated the ammonia produced at the Syncrude operation contains impurities, including odour-causing compounds. As a result, Syncrude has secured a reliable supply of purchased ammonia to support the operation of the FGD on an interim basis, while it investigates a long-term strategy to use the on-site produced ammonia. Certain other minor modifications also were undertaken on the FGD to help improve its performance.

In addition to enabling the re-start of the Stage 3 facilities, the use of imported ammonia is expected to help prevent odours and realize the FGD’s environmental benefit of virtually eliminating sulphur dioxide emissions from the expansion facilities. Syncrude has been testing the FGD using purchased ammonia since late July with good results. The cost to import the ammonia is expected to total about $3 million per month, assuming average monthly production at design capacity and transport of the ammonia via rail.

In addition to the new technology issues related to the FGD, the startup of Stage 3 presents other risks and difficulties associated with bringing a new, complex facility into operation. As such, production rates may fluctuate as Syncrude works to stabilize the operation. Canadian Oil Sands is maintaining its production outlook provided on July 25, 2006 of 85 to 95 million barrels, or 30 to 34 million barrels net to the Trust, with a single point estimate of 90 million barrels, or 32 million barrels net to the Trust. The Trust will post Syncrude’s monthly production, as per our usual practice, on our website at the following link: http://www.cos-trust.com/asset/ssb_shipments.aspx.

Canadian Oil Sands Trust provides a pure investment opportunity in the oil sands through its 35.49 per cent working interest in the Syncrude Project. Located near Fort McMurray, Alberta, Syncrude operates large oil sands mines and an upgrading facility that produces a light, sweet crude oil. Canadian Oil Sands is an open-ended investment trust, which allows it to distribute the free cash flow it generates from the Syncrude Project to Canadian Oil Sands’ investors on a tax-efficient basis. The Trust is managed by Canadian Oil Sands Limited and has approximately 466 million units outstanding, which trade on the Toronto Stock Exchange under the symbol COS.UN.

Advisory: In the interest of providing Canadian Oil Sands Trust (“Canadian Oil Sands”, “COS” or the “Trust”) unitholders and potential investors with information regarding the Trust, including management’s assessment of the Trust’s future plans and operations, certain statements throughout this press release contain “forward-looking statements”. Forward-looking statements in this release include, but are not limited to, statements and graphs (collectively “statements”) with respect to: the anticipated timing for all Stage 3 units to come on-line and begin full production. You are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although the Trust believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: the difficulties and risks involved in starting up new equipment and the additional risks and complexity of integrating a large project such as Stage 3 into existing upgrading operations; labour productivity issues; and such other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by the Trust. The outlook expressed with regard to 2006 production, capital expenditures, operating costs and funds from operations are also all based on certain assumptions and risks outlined in the 2006 guidance posted on the Trust’s website and further outlined in the Trust’s annual information form and annual and quarterly financial reports.

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Canadian Oil Sands Limited
Marcel Coutu
President & Chief Executive Officer

Units Listed – Symbol: COS.UN
Toronto Stock Exchange
For further information:

Siren Fisekci
Director Investor Relations
(403) 218-6228
investor_relations@cos-trust.com

Web site: www.cos-trust.com