Nebraska's governor asked the federal government Wednesday to deny TransCanada Corp. (TRP) the permit needed for a contreversial crude oil pipeline expansion that would dramatically boost the amount of Canadian crude oil delivered to refiners in the Midwest and the Gulf of Mexico.

In the letter to President Barack Obama and State Department Secretary Hillary Clinton, Gov. Dave Heineman expressed concern that TransCanada's proposed Keystone XL pipeline could damage the state's Ogallala Aquifier, a major source of water in the region, over which the pipeline would cross. The governor said he disagreed with the analysis the State Department issued Aug. 26 that said there would be "no significant impact" from the 1,700-mile, cross-border pipeline, which requires a speical permit from the department.

"I am concerned that the proposed pipeline will potentially have detrimental effets on this valueable natural resource and Nebraska's economy," Heineman wrote.

The State Department is expected to make a decision whether to award the permit by the end of the year.

Spokespeople for the State Department and TransCanada were not immediately available.

-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201; ben.lefebvre@dowjones.com

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