The lease is key to development of Alpine, a field that holds an estimated 365 million recoverable barrels of oil on state land bordering the Colville River and the federally owned National Petroleum Reserve-Alaska (NPRA).

The lease allows Arco and its Alpine partners, Anadarko Petroleum Co and Union Texas Petroleum, to erect a pipeline to link the new field to the huge Kuparuk field, 35 miles to the east.

Alaska Natural Resources Commissioner John Shively, who signed the lease at an Anchorage ceremony, said Arco's Alpine plans are evidence that oil companies want to keep operating in Alaska, despite depressed oil prices.

"This right-of-way is a sign that the industry is committed, in both good times and bad," Shively said.

The Alpine pipeline lease bodes well for NPRA oil leasing,recently cleared by the US Interior Department, Shively said.

"This is a piece that makes NPRA easier to do because now the infrastructure's all the way to the Colville," he said. "I think it's an important sign for people who are bidding for NPRA tracts."

Frank Brown, vice president for Arco's Alpine business unit, called the lease "another important milestone" in the field's development.

The company is awaiting a few more major permits needed before operations begin, Brown said.

Still pending are air-quality, waste-disposal and oil-spill-contingency permits, under review by the Alaska Department of Environmental Conservation, and a well permit, under review by the US Environmental Protection Agency, he said.

Alpine is expected to begin production in mid-2000. Construction began last winter.