BHP had planned to build a 14-storey, 295m long LNG terminal 22.25km off the coast of Malibu.

BHP hoped to ship the LNG in supertankers from gas fields off the west coast of Australia to the floating terminal off Malibu and then pipe it to the California mainland.

Malibu residents and other lobbyists argued that the project was a polluter, an eyesore, and a target for terrorists.

After a fierce anti-Cabrillo campaign led by Hollywood celebrities residing in Malibu and last month’s rejection by the State Lands Commission on environmental concerns, it was unlikely that Schwarzenegger would approved the terminal.

On Friday, the governor ruled that Cabrillo Port was not environmentally sound.

“Any LNG import facility must meet the strict environmental standards California demands to continue to improve our air quality, protect our coast and preserve our marine environment,” Schwarzenegger said.

“The Cabrillo Port LNG project, as designed, fails to meet that test.”

BHP said it was exploring its options following the adverse decision.

Cabrillo Port was intended to draw gas from the 8 trillion cubic foot Scarborough gas field off the coast of Western Australia.

It is unclear whether this field will now be developed.

Operator and 50% partner ExxonMobil has interests in two other proposed LNG projects in the region – Gorgon and a Papua New Guinea project that would draw on Hides and other highlands fields.

Meanwhile, Woodside Petroleum’s OceanWay LNG import proposal is still awaiting approval by Californian authorities.

It is intended to use delivery buoys more than 32km offshore from Los Angeles International Airport with dual undersea pipelines to deliver natural gas to shore.

Two similar developments were recently approved in Massachusetts.