Stopping the EIS means development cannot go forward in the foreseeable future in an area where the Northern Great Plains meet up with the Rocky Mountains.

Watson said President Bush met with environmental groups earlier this year and told them there are some places in the United States that contain abundant energy resources but may not be appropriate for energy development.

"We think the Rocky Mountain Front could be one of the places. We think that this is an area that could be a place that should not see energy development because of other important assets," Watson told reporters.

Environmental groups in the area have waged a tough campaign to stop drilling on Montana's Blind Horse Outstanding Natural Area, southeast of Glacier National Park, which is home to grizzly bears, elk and bighorn sheep.

"I think it traces to the fact that 50,000 people weighed in on this issue," said Bob Decker, executive director of the Montana Wilderness Association. "For this neck of the woods that's a lot of people." But Decker said he was concerned the company might sue to protect its lease.

Some have suggested the leases be swapped or bought back by the government.

Hunters also approved of the decision. The Rocky Mountain Front holds a very special place in the hearts of American hunters and anglers, whether they live near it or not.

"To travel there is the lifelong dream of many American sportsmen and women," the Theodore Roosevelt Conservation Partnership said in a statement.

Rather than conducting piecemeal reviews for drilling permits, officials will take a look at the whole area and conduct another EIS and hear more comments from the public on whether any type of energy development should occur in the area, Watson said.

She expected the review to be completed by 2007 or 2008. Watson said there was a need for balanced energy development from Montana south to New Mexico, an area that holds about 139 trillion cubic feet of natural gas.

She declined comment on whether she expected the Canadian company to sue the federal government. The company did not return calls for comment.

At the news conference, the U.S. Fish and Wildlife Service, an agency of the Interior Department, announced a proposal to buy easements in the same area from willing sellers whose land could help protect habitat for fish and wildlife species.

Steve Williams, director of the service, told reporters the proposal includes buying easements on 170,000 acres within a 527,000 acre conservation area.

"We'll be focusing on areas with the highest wildlife and corridors and connections for species," Williams said.

Some of the funding will come from the money set aside for wetlands and migratory bird protection, but otherwise the easements are not yet funded, Williams said. "We expect to work closely with Congress," he said.