The Obama administration has granted permission to Royal Dutch Shell to drill for oil in the Chukchi Sea, off the northwest coast of Alaska.

The company was given the final approval for its application to drill in the Arctic on Wednesday in what was a major loss for green activists who have fought the drilling plans.

Shell has been granted permission start drilling exploratory wells about 140m off the coast of Alaska – one of the best prospective offshore areas in the world.

Currently Shell are permitted to drill "top holes" up to 1,300ft deep and not in areas where there is known to be oil.

They will not be able to drill deeper and in areas where oil in known to be until their vessel is equipped with a "capping stack" to prevent oil spills, the Bureau of Safety and Environmental Enforcement (BSEE) at the US Department of the Interior ruled.

The Finnish icebreaker, MSV Fennica, is Shell's only vessel with that capability but is attempting to reach a to port in Oregon for repairs afterdamaging its hull on a shoal earlier this month.

Shell has said that they aim to begin drilling to depths of about 8,000ft below the ocean bottom within a month, once the area is clear of sea ice, their support vessels are in place, and the vessel, the Polar Pioneer is safely anchored over the well site.

Protestors against the decision fear that drilling will irreparably damage the Arctic’s pristine and fragile environment, cause oil spills worse than the 2010 BP oil spill in the Gulf of Mexico and further global warming.

The Bureau of Ocean Energy Management in the US has said there is a 75 per cent chance of "one or more large spills" happening if extensive drilling takes place across the Arctic.

"Without question, activities conducted offshore Alaska must be held to the highest safety, environmental protection and emergency response standards," BSEE director, Brian Salerno, said in a statement.

Where the drilling will take place, which is a habitat for marine mammals, the nearest coast guard station equipped to deal with oil spills is more than 1,000m away. In the case of a spill, Shell would need to use their own equipment to recover the oil until other help could arrive.

"All the evidence shows Shell can’t drill safely in the Arctic. The extreme conditions means it’s when, not if, a spill will happen," said Greenpeace Arctic campaigner Ian Duff.

"We remain committed to operating in a safe, environmentally responsible manner and look forward to evaluating what could potentially become a significant energy resource base," a spokesperson from Shell has said.

Shell's plan may is to use two rigs to drill exploration wells during the next two years.

The oil multinational was stopped from drilling exploratory wells by the US government in 2012 after a series of mishaps.

The Department of the Interior halted their exploration and ordered them to address pressing safety issues. These earlier concerns have been resolved, the department has reported.