Williams Cos. Inc. announced Monday it has agreed to buy wells in western Colorado's Piceance Basin from a closely held company for about $258 million.

Also Monday, Williams and Dominion Resources Inc. said they plan to build a natural-gas pipeline from Ohio to Pennsylvania, increasing supplies available to the Northeast.

The Colorado acquisition includes 28 wells producing the equivalent of 24 million cubic feet of gas a day, as well as related piping and more than 800 potential drilling sites on 21,800 net acres, Tulsa-based Williams said in a statement.

The properties are west of current Williams operations and have proved reserves equivalent to 150 billion cubic feet of gas. The seller was not identified.

The Piceance Basin was Williams' fastest growing source of gas in the second quarter, with output up 7 percent from a year earlier to 703 million cubic feet a day.

Williams said it locked in 80 percent of anticipated revenue through 2011 from the new properties with fixed-price contracts.

The acquisition will add 4 cents a share to 2010 profit, based on current assumptions for gas prices and costs, Williams said.

Williams, which is starting a new gas-processing plant in the Piceance Basin, owns the Northwest Pipeline, a conduit that passes through the area en route to Pacific Coast markets.

The company said it intends to add one rig this year to the eight it has operating in western Colorado, followed by another in 2010 and two in 2011.

Williams has increased its natural-gas output eightfold in the past decade.

The Ohio-Pennsylvania pipeline, called the Keystone Connector, will link Kinder Morgan Energy Partners LP's Rockies Express in Ohio to Williams' Transco Station 195 in Pennsylvania.

The joint venture between Williams and Richmond, Va.-based Dominion would develop a pipeline to transport natural gas from the Rockies and Appalachian basins.

The 240-mile Keystone Connector would carry as much as 1 billion cubic feet of gas a day and be in service by 2013.

The Rockies Express transports gas from Colorado to Ohio.

In 2007, Williams said it would build a Rockies Connector Pipeline to run from Ohio to Pennsylvania.

In June 2008, Dominion announced its Keystone pipeline would transport natural gas eastward from the Appalachian Basin.

Shares of Williams rose 30 cents, or 1.8 percent, to $17.23 on the New York Stock Exchange. The stock has climbed 19 percent this year. SUBHEAD: Colorado wells and the Keystone Connector pipeline are in the works.

Originally published by JIM POLSON & JORDAN BURKE Bloomberg News.

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