April 10 (Bloomberg) -- New York officials will reject a plan by TransCanada Corp. and Royal Dutch Shell Plc to build a liquefied-natural-gas terminal in Long Island Sound, Connecticut Attorney General Richard Blumenthal said.

New York Governor David Paterson will announce the decision to block the project, called Broadwater, in a press conference this afternoon, Blumenthal said. He said Connecticut officials were informed of the ruling last night.

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

Blumenthal on March 28 sent a letter to Paterson threatening a lawsuit and urging him to reject the terminal using authority given to governors under a federal law protecting coastal areas. That same day, 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 approval of gas-import terminals.

Calls to Patterson's office weren't immediately returned. A representative of the Broadwater Energy joint venture of Calgary-based TransCanada and Europe's Royal Dutch Shell didn't immediately respond to a telephone message seeking comment.

TransCanada owns Canada's largest pipeline system. Shell, based in The Hague, is Europe's biggest oil company.

Project Plans

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.

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

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 returned to a gaseous state so it can be piped to users.

To contact the reporter on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net.

Last Updated: April 10, 2008 10:41 EDT