Alaska gas producers are considering expanding the pipeline size for the planned $50 billion-plus Alaska LNG Project from 42 inch to 48 diameter pipe, Gov. Bill Walker said Friday in an interview.

The state of Alaska is a partner in the project with producers BP, ConocoPhillips and ExxonMobil. Walker has pushed for the larger pipe size to provide capacity for shipping more North Slope gas, the governor said.

“If the pipe is expanded the state and the producers have agreed to share the cost of the expansion,” said Katie Marquette, Walker’s press secretary.

There are concerns that a late change in the project design could complicate the Federal Energy Regulatory Commission process now underway, but FERC has told the state it won’t be a problem.

“FERC chairman Norman Bay met with the governor in August in Alaska and told the governor that the change in design at this stage will not complicate or delay the federal regulatory process,” Marquette said.

Pipe size expansion is one of the project changes Walker is pressing for, but he has backed away from two others. One is a change in the pipeline routing at its southern end so as to be closer to major population areas to supply gas. The project managers, led by ExxonMobil, have meanwhile settled on a more westerly route because it offers better conditions in crossing Cook Inlet to the planned site of a large LNG plant on the Kenai Peninsula.

Walker will accept this as long as there are assurances that a lateral spur pipeline can be built to supply gas to regional consumers. The question of who will pay for the spur as well as another spur to reach Fairbanks, in the state’s Interior, are still unresolved, the governor said.

Marquette said it is possible that the Alaska LNG Project itself could pay for the spur lines. Alternatively the state would pay for them, she said. Walker said the matter is still being negotiated.

The governor has also backed away from his earlier goal of the state owning a large share of the project, as much as 51 percent, to be able to exert more influence. He is now willing to accept 25 percent state ownership, the current arrangement with the industry partners, he said.

However, he wants an iron-clad “withdrawn partners” agreement as a contingency in case one of the industry partners backs out at a critical stage, stalling the project.

“My concern is not so much having control but having an agreement in place so that no one else can block the project from advancing,” Walker said.

“The companies are pushing strongly for an agreement on fiscal certainty (on state gas production taxes) but I want a strong withdrawn-partners contract that will give me peace of mind on project certainty,” the governor said.

Walker also wants a more definitive agreement on a timetable. The partners are to decide on moving to final engineering in 2016 and making a Final Investment Decision in 2018 or 2019, but the governor wants more certainty on that, he said.

Meanwhile, negotiations on several key agreements among the parties are at a critical stage, with state and industry teams working through the Labor Day weekend, Walker said.

“We’re not as close as I wish we could be. There are a number of significant issues we have to get closure on,” the governor said.

A deal on fiscal terms with the state, a must-have for the gas producers; a gas “balancing” agreement among the producers to cover shortfalls in gas production due to technical problems, the withdrawn partners provision and other matters are still on the table, the governor said.

The agreement on fiscal terms would mainly cover the state gas production tax although state corporate income taxes may wind up being included. Conceptually, what is being discussed is an agreement that taxes would not change for the duration of an LNG sales contract, which would give certainty to LNG purchasers.

There are legal complications in any deal on taxes, however, because the state constitution has language barring any legislative action “binding” action by a future Legislative, in this case a change in the tax.

The gas producers feel some form of contractual agreement can be constructed that would meet the constitutional requirement, but Walker said the state’s attorneys believe a constitutional amendment approved by voters is needed to really settle the matter.

Progress has been made on one item, however, Walker said, a “payment-in-lieu-of-tax” agreement with municipalities and the state along the pipeline route to cover property taxes.

The “PILT” would give gas project owners more flexibility in paying property tax, which under the current system would be a $1 billion per year tax burden. The companies have agreed tentatively on an alternate methodology for the PILT, he said.

The negotiators are under a time crunch because the governor wants to call a special session of the Legislature in mid-October to ratify the gas project agreements and legislators must have 30 days notice before a special session can be called and they must have the agreements in advance, which means notice must be given by mid-September.

Walker wants a special session because bringing up the gas contracts during the Legislature’s regular session, which begins in January, would risk getting the complex gas issues mixed in with other issues lawmakers must deal with, such as contentious budget and revenue matters.