Commerce Dept. rejects NY Broadwater LNG platform

NEW YORK, April 13 (Reuters) - The U.S. Department of Commerce said Monday it upheld New York state's objection to a floating liquefied petroleum gas (LPG) terminal and pipeline in Long Island Sound.

Nearly a year ago to the day, New York's Gov. David Paterson rejected a proposal by energy companies Shell (RDSa.L: Quote, Profile, Research) and TransCanada (TRP.TO: Quote, Profile, Research) to build an LPG platform in the waters between New York and Connecticut.

The companies appealed to Commerce, which concluded on Monday that the project's impacts to the coast outweighed the benefits on grounds that "its location in an undeveloped region of the Sound would significantly impair its unique scenic and aesthetic character" the department said in a release.

Rejection of Broadwater was the latest setback for the energy industry's efforts to build a terminal off North America's eastern shores to import supplies of frozen natural gas from the Caribbean, Middle East and West Africa.

The project was estimated in 2004 to cost about $700 million.

Connecticut's Gov. Jodi Rell applauded Commerce's decision. "This misguided project is now down for the count," Rell said in a release. (Reporting by Timothy Gardner, editing by John Picinich)