A controversial new power line in northern Norway proposed by grid operator Statnett gained Oslo's approval this week after a compromise with local residents.

Norwegian Petroleum and Energy Minister Ola Borten Moe announced Wednesday at the Petro 2013 conference in Harstad, Norway, an appeal lodged by indigenous Sami, or Laplander, reindeer herders along the route had been settled and the 420-kilovolt transmission line can now move ahead.

The line, which will cost $500 million to $650 million to build, is meant in part to serve the needs of Norway's Arctic Circle energy industries as well as to foster the development of new wind power generation.

It is to run about 100 miles from a substation in Nordland county north to Balsfjord in Troms county. In between, it will pass through the municipalities of Gratangen, Lavangen, Salangen and Bardu/Malselv.

"The new line is the best solution to improve the security of supply in the Balsfjord area," Moe said in a statement. "The power line will pave the way for increased consumption in the region and allow for connection of renewable energy production.

"Strengthening the power grid from Nordland is also a prerequisite for upgrade of the network in northern Troms and [the adjacent county of] Finnmark" -- part of the biggest-ever power grid expansion in the country.

Moe said the new line is needed to assure energy security north of Vesteralen, thus reducing the risk of electricity supply shortages to large parts of northern Norway.

It's also crucial, he said, for the continued development of oil and other industries, as well as for the facilitation of renewable energy generation there.

The new line will mainly be built parallel to an existing 420-kilovolt line, with 62 miles of a 132-kilovolt line to be replaced.

An earlier decision by Norway's Water Resources and Energy Directorate allowing the line was appealed by reindeer-herding Sami and other interests. Moe said their objections have been been given "thorough consideration."

In the compromise, the government decided the route in Gratangen would be accompanied by "a number of mitigation measures in the interests of reindeer herding," while near the Kjosvatn Lake in Balsfjord, the route is has been altered to preserve natural landscapes after complaints from local residents.

"We are pleased that we have received a final decision from the ministry to build a new line [to] Balsfjord," Statnett Chief Executive Auke Lont said in a statement. "The line is an important piece of the next generation of the main grid. It will improve security of supply in northern Norway and facilitate value creation in the region."

The ultimate aim of Statnett is to string a high-capacity power line from Balsfjord to Skaidi in Finnmark, and then on to Hammerfest, where it could supply Barents Sea oil operations run by Norway's state-owned Statoil at Melkoya and ENI's Goliat field.

Statoil announced last year it will not go ahead with an expansion at Melkoya due to insufficient gas discoveries, but Statnett indicated it is continuing with the licensing process for that stretch should the situation change.