U.S. gives Shell OK to begin oil drilling prep in Beaufort Sea

WASHINGTON Thu Sep 20, 2012 4:03pm EDT

Snow covered Shell logo is seen at a petrol station in Istanbul February 17, 2012. REUTERS/Osman Orsal

Snow covered Shell logo is seen at a petrol station in Istanbul February 17, 2012.

Credit: Reuters/Osman Orsal

WASHINGTON (Reuters) - With Royal Dutch Shell's (RDSa.L) plans to tap Arctic oil this year on hold, the Obama administration on Thursday said it would allow the company to begin some preliminary drilling in Alaska's Beaufort Sea.

The U.S. Interior Department said Shell can undertake limited preparatory activity in the Beaufort, but the company would not be allowed to drill to areas containing oil at this stage.

The company said previously it would focus on drilling top hole wells which stop short of oil reservoirs to help pave the way for full fledged oil drilling next year.

The government issued a similar permit for Shell in the Chukchi Sea last month.

Shell said earlier this week it was giving up on long-delayed plans to explore for oil this year, after its required oil spill containment system was damaged during tests.

Shell has spent $4.5 billion since 2005 in its effort to develop the Arctic's vast oil reserves, but the company has faced intense opposition from environmentalists and native groups, as well as regulatory and technical hurdles.

(Reporting by Ayesha Rascoe;Editing by Sofina Mirza-Reid)

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