updated 5/19/2008 12:40:20 PM ET 2008-05-19T16:40:20

The Interior Department said Friday it is moving forward with an oil and gas lease sale covering nearly 4 million acres in Alaska's National Petroleum Reserve.

The government says the lease area could hold 3 billion barrels of oil. Friday's decision also includes a plan that sets aside more than 600,000 acres of land considered environmentally sensitive.

The BLM will not open 219,000 acres of Teshekpuk Lake and its islands to oil and gas leasing. Another 430,000 acres north and east of the lake will be off limits for 10 years.

"This plan provides a balanced approach to energy development and wildlife protection, and forms a solid basis for the Bureau of Land Management to proceed with an oil and gas lease sale later this year," Secretary of the Interior Dirk Kempthorne said in a prepared statement.

The announcement potentially brings an end to legal battles over the lease sales. Two years ago, a federal judge halted the sale of oil leases, saying the agency's environmental studies were too narrow.

Friday's announcement drew hedged praise from environmentalists and an industry association made up of the state's oil companies.

Eleanor Huffines, Alaska regional director for The Wilderness Society, said she would have preferred the entire 430,000 acres be permanently off limits along with the Teshekpuk Lake area.

"We're not opposed to oil and gas leasing in the Northeast area," she said. "We are opposed to the more sensitive areas being opened. At least by deferring it, Secretary Kempthorne recognizes the sense of importance of that area."

Marilyn Crockett, executive director for the Alaska Oil and Gas Association, said she was relieved to have some kind of resolution so lease sales can move forward.

Crockett added that not having access to the additional land could mean 300,000 barrels of oil goes unproduced.

"It was industry preference to open the entire reserve to oil and gas development," she said.

The National Petroleum Reserve-Alaska sits on federal land that is part of Alaska's North Slope, lying just west of the Arctic National Wildlife Refuge.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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