WILLISTON - Vermont's natural gas utility has hired a contractor and plans to break ground June 1 on its pipeline extension down the western side of the state.

Vermont Gas Systems intends to build a 41-mile, $86.6 million natural gas pipeline extension through Addison County to connect service in Chittenden and Franklin counties to Middlebury. The company expects the project to be completed by next year.

Vermont Gas also has applied to state regulators for the second phase of the pipeline expansion, which would connect Middlebury to the International Paper mill in Ticonderoga, New York. Phase 2 would move the utility closer to completing its final proposed extension to Rutland, the company said.

State regulators gave the company the go-ahead for the first phase of the project last year, but approximately 50 percent of the 222 landowners along the proposed route have not reached right-of-way agreements with the company, Vermont Gas President and CEO Don Gilbert said.

The company said Monday it has secured the first 10 miles of the pipeline's right-of-way with property owners.

The company signed a multimillion dollar contract with Engineers Construction Inc., a Vermont company that has worked with Vermont Gas, to do the horizontal directional drilling at more than 17 locations along the first phase of the pipeline route.

The entire pipeline will be buried 3- to 5-feet below ground, the company said. The drilling technique is designed to dodge environmentally sensitive areas along the pipeline route, including archeological and wetland sites.