The Williams Companies Inc. has agreed to buy Transco Energy Co. in a $3 billion merger between the two natural gas pipeline companies.

Williams operates natural gas pipelines in the Northwest and central parts of the country, while Transco does most of its business in the Midwest, Northeast and Gulf Coast areas.Under the agreement, Williams will buy up to 24.6 million shares of common stock and related common stock purchase rights for $17.50 each. Williams would buy the rest of the company with 0.627 share of its own stock for each Transco share.

Williams in August agreed to sell the long distance operations of WilTel to LDDS Communications Inc. for $2.5 billion. That deal hasn't closed.

Transco operates 10,500 miles of pipeline from the Gulf of Mexico through the South to New York. Tulsa -based Williams operates more than 10,000 miles of natural gas pipeline.