Questar Corp. (STR) said Sept. 22 it has entered into a joint venture (JV) to develop natural gas-producing properties in western Colorado’s Piceance Basin.

Questar's subsidiary, Wexpro Co., will partner with Piceance Energy LLC, a subsidiary of Laramie Energy II LLC and a leader in developing low-cost drilling and completion strategies in the basin.

Wexpro said it expects to spend $60- to $70 million on an 80-well drilling program targeting the Mesaverde Formation. The agreement also provides Wexpro options to acquire development rights for deeper formations and, with mutual consent, to significantly extend and expand the drilling program up to 300 wells, depending on commodity prices.

The JV partners will begin drilling in the Collbran Valley in Mesa County in early October and continue through early 2017.

The Salt Lake City-based company views the JV as another step in its strategy to expand its cost-of-service model, which provides a long-term hedge against natural gas-price volatility, said Ron Jibson, Questar chairman, president and CEO.

"The resulting low-cost natural gas production could work very well in providing gas supply on a cost-of-service basis to utilities and other users,” Jibson said in a statement.

Under the terms of unique agreements in Utah and Wyoming, Wexpro currently produces gas from certain properties at cost of service benefiting Questar Gas’s utility customers.

A current partner of Wexpro is in the process of obtaining board approval to participate in the production from these wells on a cost-of-service basis, according to the release.