We develop a theory and the method of its application for chemical dynamics in systems, in which the adiabatic potential energy hyper-surfaces (PES) are densely quasi-degenerate to each other in a wide range of molecular geometry. Such adiabatic electronic states tend to couple each other through strong nonadiabatic interactions. Technically, therefore, it is often extremely hard to accurately single out the individual PES in those systems. Moreover, due to the mutual nonadiabatic couplings that may spread wide in space and due to the energy-time uncertainty relation, the notion of the isolated and well-defined potential energy surface should lose the sense. On the other hand, such dense electronic states should offer a very interesting molecular field in which chemical reactions to proceed in characteristic manners. However, to treat these systems, the standard theoretical framework of chemical reaction dynamics, which starts from the Born-Oppenheimer approximation and ends up with quantum nuclear wavepacket dynamics, is not very useful. We here explore this problem with our developed nonadiabatic electron wavepacket theory, which we call the phase-space averaging and natural branching (PSANB) method [T. Yonehara and K. Takatsuka, J. Chem. Phys. 129, 134109 (2008)]10.1063/1.2987302, or branching-path representation, in which the packets are propagated in time along the non-Born-Oppenheimer branching paths. In this paper, after outlining the basic theory, we examine using a one-dimensional model how well the PSANB method works with such densely quasi-degenerate nonadiabatic systems. To do so, we compare the performance of PSANB with the full quantum mechanical results and those given by the fewest switches surface hopping (FSSH) method, which is known to be one of the most reliable and flexible methods to date. It turns out that the PSANB electron wavepacket approach actually yields very good results with far fewer initial sampling paths. Then we apply the electron wavepacket dynamics in path-branching representation and the so-called semiclassical Ehrenfest theory to a hydrogen molecule embedded in twelve membered boron cluster (B12) in excited states, which are densely quasi-degenerate due to the vacancy in 2p orbitals of boron atom [1s22s22p1]. Bond dissociation of the hydrogen molecule quickly takes place in the cluster and the resultant hydrogen atoms are squeezed out to the surface of the cluster. We further study collision dynamics between H2 and B12, which also gives interesting phenomena. The present study suggests an interesting functionality of the boron clusters.