How to safely keep sheep and dogs on the same property?

I have a 1 year old Labrador Retriever and would like to get some sheep.  The dog generally has free range of the property when I'm home, usually just sitting on the patio or playing in the yard.  She's well behaved, but she's a hunting dog and has all the instincts that come with that.  The sheep pastures would be 5 strand electric fence with portable electric netting being used on some occasions.  The pastures would all be within 200 yards of the house.

I don't want to keep the dog in the kennel 24x7. After training and some transition time, could I eventually let the dog free range with sheep nearby?

In all likelihood, yes.  It took me a week or two to teach my pitbulls not to chase my chickens, and now they all walk about the property together without a second glance.  Also, Labs are bird hunters, so your job should be even easier.  Don't be surprised if they all become friends pretty quickly.