Federal energy regulators on Thursday approved the construction of a liquefied natural gas facility in Long Island Sound, a victory for the company planning the facility and a setback for environmentalists who oppose the terminal.

The Federal Energy Regulatory Commission said Broadwater Energy Group may build the facility as long as it takes dozens of new measures to improve safety and limit effects on the environment. The remaining hurdle is New York State, which ìs facing an April 11 deadline to decide whether the facility will violate the state's coastal-management policies.

"Based on all available scientific facts, we approve the Broadwater project today, subject to rigorous conditions, because it can meet the projected energy needs for New York City, Long Island and Connecticut, and can provide the service safely, securely and with limited adverse impact on the environment," FERC Chairman Joseph Kelliher said in a statement.

Broadwater, a joint venture between Shell Oil Co. and TransCanada Inc. (TRP), wants to build the floating vessel to supply parts of New York and Connecticut with natural gas, which is considered a cleaner source of energy than other sources, such as coal. The company says shipments from ocean-going carriers would arrive every two to three days and be delivered through an existing pipeline.

Environmentalists are opposed to the project, and have lined up support from Connecticut's governor, who is pressing New York's new governor over the matter.

On Thursday, Conn. Gov. M. Jodi Rell called the FERC decision "a disgrace" and said it was a discourtesy to New York's new governor, David Paterson, who has been in office less than a week.

"Broadwater is indefensible on any basis but greed - there is no need for this project from an energy policy standpoint and no need for this project from a market standpoint," Rell said in a statement.

Shell Oil is an affiliate of Royal Dutch Shell PLC (RDSA).

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