A bill introduced Friday by U.S. Senator Lisa Murkowski of Alaska would permit oil production in the ecologically sensitive Arctic National Wildlife Refuge, but only from directional wells that are drilled outside the refuge's borders.

Murkowski, a Republican who first announced her plan last week during an address to the Alaska legislature, characterized the bill as a compromise that addresses environmentalists' concerns about impacts within the refuge while allowing for some of the oil beneath it to be tapped.

Everybody wins with this bill. America improves its energy security and the conservation community is ensured that there will be no visible impact on the refuge, she said in a statement.

Murkowski's newly elected Democratic colleague from Alaska, Senator Mark Begich, signed on as a co-sponsor of the bill. The senators, like most elected officials in the oil-dependent state, support opening the refuge's entire 1.5-million-acre coastal plain to oil development.

Environmentalists criticized the idea.

This bill is nothing more than an attempt to distract us from the real issue: the out of control leasing and development that's been going on for the past eight years in America's Arctic, Kristen Miller, Government Affairs Director at Alaska Wilderness League, said in a release.

The region is already under immense stress from the impacts of climate change and there are now close to 100 million acres open for oil and gas development, Miller said.

The fight over oil development in the Arctic refuge has raged for decades. The entire refuge sprawls over 19 million acres and the debate has been over whether Congress should allow drilling in the coastal plain.

The area, a narrow strip wedged between the peaks of the Brooks Range and the Arctic Ocean, holds potential for rich deposits of oil and natural gas. But it is also a vital site for polar bears and the migratory Porcupine caribou herd which raises young there.

The U.S. Geological Survey estimates the coastal plain holds 10.3 billion barrels of recoverable oil, with about a quarter of that amount attributable to bordering Native-owned lands and state-owned waters.

Murkowski said her extended-reach drilling proposal would allow for access to 10 percent of the coastal plain's oil and 80 percent of the area's natural gas, as long as wells could extend eight miles.

But Eleanor Huffines, Alaska director for The Wilderness Society, said hopes for long-reach extended drilling were unrealistic.

It rarely happens to the extent that they propose, she said.

Although BP unit BP Exploration (Alaska) Inc is planning to drill a new offshore prospect, Liberty, with wells that will reach a record eight miles from where they start, most North Slope wells cannot extend nearly as far, Huffines said.

Under the bill, exploration drilling and seismic testing would be allowed within the refuge, but only during the winter and only from ice roads or pads, said Robert Dillon, a Murkowski energy aide. Wells would have to be capped at winter's end, and no permanent surface occupancy would be allowed, he said.

So the caribou wouldn't see it in the summer. Nobody would know that it was there, he said.

(Editing by Christian Wiessner)