TransCanada, Shell's plan for LNG rejected

Shaun Polczer
Calgary Herald
April 14, 2009

CALGARY - Plans by Calgary-based TransCanada Corp. and Shell to build a floating liquefied natural gas( LNG)terminal in the water off New York City were dealt a potentially fatal blow Monday after the United States'Commerce Department rejected the project.

TransCanada and Shell had hoped to build the$700-million Broadwater facility in the water of Long Island Sound in a bid to level off price spikes and open a new avenue for natural gas supplies into the lucrative Northeastern U. S. market.

Traditional gas sources from Canada and the Gulf Coast are expected to decline even as energy use in the area is expected to surge through 2025.

But in its ruling, the department said "the record does not establish that the national interest furthered by the project outweighs the project's adverse coastal effects. Separately, the record does not establish that the project is necessary in the interest of national security."

The rejection comes despite unanimous approval from the Federal Energy Regulatory Commission and U. S. Coast Guard over the objections of both the state governments of New York and Connecticut. Monday's ruling means Broadwater will have no recourse but to appeal to the U. S. courts to overturn the ruling, which Connecticut Gov. Jodi Rell described as a"knockout blow" for the project.

"This misguided project is now down for the count," she said in a statement posted on her website. "The ruling means we can turn our attention to . . . policies that will meet our needs for power without devastating treasured natural resources."

The decision comes almost a year to the day after New York Gov. David Paterson stood on a Long Island beach to officially proclaim the state's opposition to the proposal. "This is an extremely important victory for the health and future of the Long Island Sound and the State of New York."

TransCanada spokespeople referred media requests to the New York offices of the Broadwaterconsortium, whichinturn said it hasn't decided whether to appeal the decision.

"We are disappointed in the commerce secretary's ruling," said John Hritcko, Broadwater's senior vice-president. "We believe the region will need additional natural gas to ensure a reliable supply of energy, help reduce price spikes and meet air quality and climate change goals."

spolczer@theherald.canwest.com

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