Williams Cos. plans to build a processing plant on Colorado's Western Slope to increase by more than fivefold production of natural gas liquids from gas extracted in the Piceance Basin.

The Willow Creek plant, with a capacity to process 450 million cubic feet of natural gas a day, is expected to begin operations in the third quarter of 2009, Tulsa, Okla.-based Williams said.

Williams said it almost doubled production of gas in the Piceance Basin, straddling Garfield and Rio Blanco counties, in the past two years.

"It highlights the level of production they see from the area," said Gordon Howald, an analyst at Calyon Securities (USA) Inc. in New York who rates Williams shares a "buy" and doesn't own any.

The processing plant will be able to recover 20,000 barrels of natural gas liquids a day, with output later ramping up to 30,000 barrels a day. Williams did not provide a cost estimate for the project.

Also, Williams and its joint venture partner, Tulsa-based Oneok Inc., will spend $120 million to build a 150-mile extension to the Overland Pass pipeline to transport natural gas liquids from Williams processing plants in the Piceance Basin. Williams has a 1 percent stake in the venture with an option to increase it to 50 percent and become the operator within two years of the opening of the pipeline.