Cadiz Inc. said Friday it signed letters of intent with five Southern California water providers to partner on a $200 million underground water storage project.

The proposal resurrects a water-banking project that the Metropolitan Water District killed in 2002 after opposition from environmentalists and questions that arose about the finances of the Los Angeles natural resources company.

The project would involve pumping Colorado River water into an aquifer beneath 35,000 acres Cadiz owns near the U.S. Marine Corps base at Twentynine Palms. The water would then be stored and piped to Los Angeles and other Southern California counties.

The prior effort died when environmentalists argued that pumping the aquifer would harm the desert’s delicate ecology. Other critics questioned Cadiz’s ability to carry out the project, given the company’s high debt load.

Cadiz is seeking to overcome that opposition by partnering this time with water agencies to share in the costs of producing environmental studies and any measures that need to be taken to lessen environmental damage. The project includes construction of a 44-mile underground pipeline.

“The interest in our project reflects an overwhelming public interest in developing long-term sustainable solutions to the water crisis,” said Cadiz General Counsel Scott Slater in a statement. “We are moving actively to bring our water supply and conservation project on line in an environmentally responsible manner.”

The water providers include four public municipal water agencies and San Dimas-based Golden State Water Company. They together serve more than 3 million water customers in Los Angeles, San Bernardino, Riverside, Orange and Ventura counties.

Gov. Arnold Schwarzenegger is among several politicians and labor leaders backing the new proposal, which he claimed is environmentally sensitive.

“This innovative project, utilizing sophisticated water conservation practices, will sustainably recover more than one million acre feet of water that would otherwise be lost to evaporation and make it available to help provide a reliable source of water for Southern California,” Schwarzenegger said in a statement.

Cadiz shares closed up $3.90, or 45 percent, $12.50 on the Nasdaq, where it was the biggest price gainer on Friday.