* Army Corps meets with elected officials, industry members
* Water released from Illinois lake to boost river
* White House helped speed up hiring for river work
* Shipping group warns river will still close by year's end (Adds details on blasting, comments from Coast Guard, shipping group)
By Tom Polansek
CHICAGO, Dec 17 (Reuters) - The U.S. Army Corps of Engineers projects no "significant interruption in navigation" on the Mississippi River due to low water levels, U.S. Senator Dick Durbin said on Monday.
However, shippers remained nervous about the potential for crippling restrictions.
The Army Corps briefed Durbin, the No. 2 Democrat in the Senate; other elected officials; and members of the agricultural industry in East Alton, Illinois, on Monday on its efforts to keep the river open following the worst U.S. drought in more than 50 years.
Some shippers of grain, coal and steel have worried the river will close to navigation on a busy stretch between St. Louis and Cairo, Illinois, due to low water. Declining water levels have already forced barge tows to lighten loads or risk groundings.
However, expected rains plus water that is being released into the river from a lake in southern Illinois should keep open the critical route to the Gulf of Mexico, Durbin said in a telephone interview after the meeting.
"There's no anticipated closure of the river," said Durbin, who plans to ask the Army Corps for an update on the situation after the end of the year.
The river and its tributaries are critical for commerce because they draw on a region that produces 90 percent of U.S. farm exports, which are key for the U.S. balance of trade. Sixty percent of grain exports go through New Orleans.
The Army Corps has been dredging the river to aid transportation and has identified other dredging ships that can be used if necessary, Durbin said.
During the weekend, it began releasing more water into the river from Carlyle Lake in southern Illinois. That move is projected to raise the river by six inches at Thebes, Illinois, by Dec. 24.
Rain or snow expected in the Midwest next week also should help increase water levels, particularly if snow melts in the upper Midwest soon, said John Dee, meteorologist for Global Weather Monitoring.
Thebes, located about 130 miles southeast of St. Louis, is a key location where rock formations can damage barges when water levels drop too low.
The Army Corps has started demolishing hazardous rock pinnacles along a 15-mile stretch of river near Thebes to aid navigation.
U.S. President Barack Obama helped speed up the hiring of contractors by the Corps to blast the rocks when he discussed concerns about the river during a meeting last week, Durbin said.
Initially, the Corps warned it might not be able to hire contractors until February or March, U.S. Representative Jerry Costello, who attended the briefing with Durbin, told Reuters. Costello is a Democrat who, like Durbin, is from Illinois.
"In a week's time, the Corps has felt some pressure from above, and they have started work much earlier," said Ross Prough, an at-large director for the Illinois Soybean Association and another attendee at the briefing. "We're certainly pleased with that development."
The Coast Guard will close the river at Thebes from 6:00 a.m. Central (1200 GMT) to 10:00 p.m. for safety reasons during the blasting, restricting barge traffic. One-way traffic will be allowed to pass overnight.
Vessels will be allowed to pass on a first-come first-served basis, although vessels with urgent shipments may be given priority. The Coast Guard has moved a mobile command center to the Thebes region to manage river traffic through the area.
"We are expecting a queue to develop but we don't exactly know how long the queue will get," said Lt. Colin Fogarty, public affairs officer for the Coast Guard's upper Mississippi River sector.
It was unclear how long the rock-removal project would take. Durbin said it would likely last three weeks to four weeks, while the Army Corps said it would be finished before the end of March.
Despite the actions by the Corps, the American Waterways Operators said the river will "be effectively closed to navigation" by the end of the year unless water is released from the Missouri River.
The rock removal and release of water from Carlyle Lake are "really just delaying the inevitable," A merican Waterways sp okeswoman Ann McCulloch said.
Drought conservation steps have cut water flow into the Mississippi River from upriver dams on its tributary the Missouri River.
Cities and towns along the Missouri River, including Omaha and Kansas City, rely on the river for drinking water. Three nuclear power plants in Nebraska and Missouri also use river water for cooling.
Rodney Weinzierl, executive director of the Illinois Corn Growers Association, also expects the river will effectively shut due to low water.