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New York’s Paterson Rejects Shell Broadwater Long Island Gas Terminal (Update2)

Bloomberg: New York’s Paterson Rejects Long Island Gas Terminal (Update2)

By Daniel Whitten

April 10 (Bloomberg) — New York Governor David Paterson rejected a plan by TransCanada Corp. and Royal Dutch Shell Plc to build a liquefied-natural-gas terminal in Long Island Sound.

The project shouldn’t go forward because of the environmental damage it would cause, Paterson said today. “We must accept the challenge of developing comprehensive alternatives to meet the growing demand for energy on Long Island and throughout the state,” he said in a statement.

Connecticut Attorney General Richard Blumenthal on March 28 urged Paterson to block the terminal using authority under a federal law protecting coastal areas. New York Democrat Hillary Clinton and three other U.S. senators introduced a bill that would reverse a 2005 law giving the federal government primary authority over approving gas terminals.

“The environmental costs would be unacceptable to Long Island Sound and the coast of New York,” Blumenthal said today in a telephone interview. “There are better, safer, saner alternatives than this environmental monstrosity and public- safety menace.”

The Broadwater Energy joint venture of Calgary-based TransCanada and Europe’s Royal Dutch Shell said it will review Paterson’s decision before deciding whether to appeal. TransCanada owns Canada’s largest pipeline system. Shell, based in The Hague, is Europe’s biggest oil company.

“We continue to believe that the Broadwater project, as proposed, is the best option for New York state to meet its growing demand for clean, affordable, reliable natural gas — and does so with no near-shore or onshore impacts,” John Hritcko, a Broadwater vice president, said in the statement.

Appeal Prospects

Broadwater could appeal Paterson’s decision to the U.S. Commerce Department. The Federal Energy Regulatory Commission approved the project last month. The venture also needs approvals from three New York state agencies, the Army Corps of Engineers and the U.S. Coast Guard.

“This fight is not over now and it will not be over until Broadwater concedes that the project is dead,” Blumenthal said.

The Broadwater terminal would be able to deliver 1 billion cubic feet of natural gas a day to markets on Long Island, in metropolitan New York and western Connecticut. It could provide about 25 percent of the area’s supply of the heating and power- plant fuel, according to the project’s Web site.

“Consumers I think are just better served by more sources of supply, and right now, they are limiting rather than encouraging supply,” said Adam Sieminski, chief energy analyst at Deutsche Bank AG in New York. “That almost always means higher prices to consumers.”

`Dangerous Precedent’

Paterson said in his statement that the project would “serve as a dangerous precedent for industrializing a body of water.” He also said it would disrupt commercial and recreational fishing and damage an estuary “that people have spent years and millions of dollars trying to clean up.”

Liquefied natural gas, or LNG, is gas chilled to a liquid state for shipment by tanker from producing areas beyond the reach of pipelines. The fuel is received at import terminals and processed back into a gaseous state so it can be piped to users.

“Governor Paterson’s opposition to the Broadwater liquefied-natural-gas facility is unfortunate,” Jerry Kremer, advisory board chairman of the New York Affordable Reliable Electricity Alliance, said in a statement. “Ultimately, we hope Broadwater will be approved.”

Connecticut won a court ruling last year blocking a proposed pipeline that would transport gas across Long Island Sound. The state opposed that project, called Islander East, citing its potential impact on shellfish.

Spectra Energy Corp., the second-biggest U.S. pipeline company by market value, has been in talks with Connecticut officials to negotiate a settlement on the project.

“We know the region needs a solution,” Spectra spokesman Molly Boyd said today. “We’re fully committed to finding a solution with officials in New York and Connecticut.”

To contact the reporter on this story: Daniel Whitten in Washington at [email protected].

Last Updated: April 10, 2008 16:54 EDT

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