NORTHPORT, N.Y. – Gov. David Paterson said Thursday that New York won’t approve plans for a $700 million liquefied natural gas terminal in Long Island Sound, a project supporters say would reduce utility bills but that critics say would be an environmental hazard and a possible terrorist target.

Paterson joins Connecticut Gov. Jodi Rell and a host of elected officials on both sides of the sound who oppose the project, known as Broadwater.

“The fact is, Broadwater is behind us,” Paterson said at a news conference at a state park along Long Island’s north shore. A crowd of about 200 politicians, environmentalists and Long Island residents applauded.

The 1,200-foot-long, 82-foot-high terminal would be located 9 miles from Long Island and 10 miles from Connecticut. The Federal Energy Regulatory Commission says it would be the first floating terminal in the U.S. for storage and delivery of natural gas.

Foes claim the terminal could imperil the ecosystem; Paterson said it “would scar Long Island Sound.” But FERC concluded last month that the project would have no major environmental effect on the region.

Opponents also say a terrorist attack there could trigger a massive fire.

Broadwater Energy, a joint venture of Shell Oil and TransCanada Pipelines Ltd., still could appeal to the U.S. Department of Commerce.

Liquefied natural gas industry spokesman Bill Cooper said New York’s decision was “big” but “it’s not an absolute final decision.”

“This is one decision of a government body for which there are numerous more decisions to be made,” he said.

Broadwater’s senior vice president and regional project director, John Hritcko, said the company disagreed with New York’s decision but hadn’t read the findings and was considering its options.

“We are disappointed and concerned,” he said. “We specifically designed this project to be consistent with the state’s coastal management policies and offered a number of additional commitments that would further enhance the state’s coastal resources.”

Liquefied natural gas is supercooled to minus 260 degrees Fahrenheit, reducing its volume so it can be transported in a tanker.

A study by the Government Accountability Office released last year concluded that more research was needed on the risks of LNG, and found that an accident or terrorist attack on an LNG tanker ship could create a fire so intense it would burn people a mile away. Advocates for building more LNG facilities, however, say they have an excellent safety record.

Paterson said a coastal impact study done by his Department of State found the Broadwater project should not proceed. New York could appeal if federal officials try to move the plan forward, but he said he hoped it wouldn’t come to that.

“I would hope that the commerce secretary would now have heard from the Democratic governor of New York, the Republican governor of Connecticut and bipartisan efforts that are overwhelming from both states,” he said. “Clearly, liquefied natural gas can be a good energy source, but not when it’s in the middle of a sound and in many ways eroding what is one of our natural treasures.”

The Broadwater consortium had been running a high-profile public relations campaign that included TV, radio and print ads, extolling the region’s need for natural gas and claiming energy bills for Long Island ratepayers would drop $300 a year. Opponents said consumers’ bills would not actually drop, but conceded they might rise more slowly if the LNG terminal were approved.

“Thousands of consumers and businesses believe that Broadwater is the right project, in the right place at the right time, to bring additional new natural gas supply to an area that is desperately in need of clean, affordable, reliable energy,” the company said in a statement.

Former New York Mayor Rudy Giuliani’s company, Giuliani Partners, did a safety and security assessment in 2006 and said the proposed terminal would be “as safe a facility in design as you could possibly have.”