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Economy Stymies Nebraska Pipeline Project

The recession and credit crisis have caused the postponement of a $79 million pipeline project in Nebraska proposed by Nebraska Resources Co. LLC (NRC), a unit of Seminole Energy Services, the company said recently. Collapse of the ethanol industry, which the pipeline would have served, was largely blamed.

The pipeline was intended to serve local distribution systems, ethanol facilities and other large-use customers within Nebraska. It would have been more than 130 miles of 4- to 20-inch diameter pipeline originating from Kinder Morgan's Trailblazer Pipeline (see NGI, April 16, 2007). Full in-service at one time was expected to be in March 2009.

"...NRC has been unable at this time to conclude agreements with credit-worthy counterparties that will support the further financing and development of the pipeline," NRC President Daniel Frey said in a recent project update. "Many factors have prevented NRC from moving forward. The collapse of he ethanol industry and the cancellation or delay of several proposed ethanol-related facilities has been a significant challenge for NRC. The unprecedented difficulties occurring in the overall credit markets have also impacted NRC's ability to secure acceptable debt financing."

Frey said the east-central Nebraska corridor proposed for the pipeline is still in need of expansion and competitive gas transportation alternatives. "With the help of a collaborative effort among regulators, economic development proponents, utilities and large industrial customers, we have prepared the ground for such a project in the future," he said.

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