Alaska’s gas line corporation wants to raise cash from outside investors. Not so fast, says the state Senate.

JUNEAU — How much oversight should Alaska lawmakers retain as Gov. Bill Walker's administration forges ahead on the state's proposed $43 billion liquefied natural gas export project?

That question has become one of the focuses of the state Legislature's end-of-session negotiations, as Walker's administration pushes for new flexibility to allow outside investors to buy into the project.

Walker, in his annual budget, asked lawmakers to allow the state-owned Alaska Gasline Development Corp. to accept unlimited amounts of cash from investors next year. AGDC officials say they want money from outside entities to help pay for engineering work and an extensive environmental review process, among other things.

A spokesman for the corporation, Jesse Carlstrom, said it's "highly unlikely" the state would give up a controlling stake in the project. But the state Senate, in its rewrite of the state's spending plan, blocked the corporation from accepting any outside cash — setting up a fight with Walker's administration over the final version of the budget, which has still not been approved.

Senators in the Republican-led majority, who at times have voiced distrust with Walker's gas line plans, need more information before agreeing to the administration's request, Senate President Pete Kelly, R-Fairbanks, told reporters Friday.

"This is a huge, game-changing project, but it could break either way," Kelly said. "It could break the state's back; it could make us prosperous well into the future. We have to do this right."

Among the Senate's concerns are how much control the state would give up in exchange for investment, and whether allowing investment could expose the state to more risk or otherwise obligate it in some way, according Soldotna Republican Sen. Peter Micciche, the majority leader.

The state of Alaska has been studying the natural gas plan for decades, and Walker is the latest in a string of governors to reshape the project in his own vision. The current iteration involves an 800-mile pipeline from the North Slope oil fields, ending on the Kenai Peninsula, where the gas would be liquefied and, most likely, shipped to Asia.

[Related: Alaska gas line agency chief recaps visit from Chinese delegation as funding remains unresolved]

The state's major oil company partners in the project announced they were stepping back from it in 2016, citing its cost and low prices for gas and oil.

But the project got a boost in November, when Walker's administration, at a ceremony in Beijing with the Chinese and American presidents, announced that the gas line corporation had signed a deal with three major Chinese companies.

But though the Chinese companies have agreed to cooperate with the state gas line corporation and study the project, they haven't promised to spend any money on it.

The gas line corporation has some $60 million left in its accounts, and it's looking for hundreds of millions more to pay for the engineering, permitting and environmental review processes needed before a final decision can be made on whether to build the project.

With the state facing a major budget deficit, the corporation is turning to other sources for that cash. It announced last month that it's working with two major banks, Bank of China and Goldman Sachs, to find investors.

The corporation is still working with the banks to determine what kind of investors will be pitched on the project, said Carlstrom, the spokesman.

But the line corporation currently lacks the ability to cash checks written by any outside investors, no matter how large or small. To do that, it needs what's called "receipt authority" to be written into the state's annual budget.

The Walker administration, in its initial budget request in January, asked the Legislature for open-ended receipt authority, which would allow the corporation to accept as much money as it can raise.

The largely-Democratic House majority, which has generally aligned with Walker on gas line policy, left the receipt authority in its rewrite of the budget. But it capped it at $1 billion.

That's a tiny fraction of what's expected to be the project's total cost, said Anchorage Democratic Rep. Chris Tuck, the majority leader.

"To do anything more than that will take legislative approval," he told reporters at a briefing Friday. "We're not giving AGDC the authority to allow someone to own the entire pipe."

Early investors in the project — those who put up cash before a final decision on whether to build it — will have the potential for slightly higher returns, since they'd be taking on more risk, according to Carlstrom.

It wasn't immediately clear, from Carlstrom's answers, exactly how much of a stake in the project the early investors could obtain. But he said it's very unlikely they'll end up with a controlling share — a view echoed by Larry Persily, a former federal pipeline official who now works as an aide in the Alaska Legislature.

"I can't imagine that any governor, or gubernatorially-appointed Alaska Gasline Corporation board members, would ever agree to giving up 51 percent ownership of a project without a very public and spirited debate," Persily said.

The mostly-Republican Senate majority, however, deleted the corporation's receipt authority entirely, leaving the final amount up for negotiation between legislative leaders.

Kelly, the Senate president, said he's appointed a small team of senators and staffers to review the corporation's request. It includes Micciche, Sitka Republican Sen. Bert Stedman and three legislative aides.

Micciche said the Senate's scrutiny shouldn't be seen as his chamber being an "obstacle."

But senators are also wary of ceding more authority than necessary to the Walker administration and the gas line corporation, he said.

"We're asking to be treated as partners in the project," he said. "If we're going to provide receipt authority, it's going to be as little as possible."