LAKE BUENA VISTA, FLA. – With baseball's annual winter meetings set to close on Thursday, the Twins are making progress on a two-year contract for righthander Mike Pelfrey, according to a source with knowledge of the negotiations.

The Twins initially offered a two-year, $10 million deal. But Twins General Manger Terry Ryan met with Pelfrey's agent, Scott Boras, most recently on Tuesday, and the sides have nearly bridged the gap. That increases the chances that the Twins could announce the signing of their third starting pitcher this offseason as early as Thursday. But there's a chance nothing could be finalized until next week.

"We have been with the Twins,'' Boras said. "Terry and I have met a couple times, so the dialogue continues.''

Ryan said on Wednesday that he spent much of the day in league meetings but was able to also work on some deals. He was not sure if he would be able to close a deal by the end of the winter meetings.

"I don't care too much about the timing,'' Ryan said. "Whether it is a day or 10 days. The important thing is if you feel like you've got something. It is very similar to last year.''

Last year, the Twins didn't appear to be close to a deal heading into the final day of the meetings. Then the lobby of the Opryland Hotel in Nashville began to buzz with talk of a possible trade between Philadelphia and the Twins. The next day, Ryan met with the media after the Rule 5 draft to discuss why he dealt Ben Revere to the Phillies.

Mike Pelfrey went 5-13 with a 5.19 ERA for the Twins last season, his first work after elbow surgery. He made $4.1 million then, and he has been offered a two-year, $10 million deal since.

So the Twins, agents and other teams headed into Wednesday night/Thursday morning trying to get something done before the shuttles leave for the airport Thursday afternoon. The Rule 5 draft is set for 9 a.m.

The Twins remain interested in righthanders Matt Garza and Bronson Arroyo, but it's unclear whether they would continue to pursue one of the two if they land Pelfrey. The Twins also need to address the offense and might need to allocate dollars in that area. Garza, during a phone conversation Tuesday, said he was in no hurry to make a decision. Arroyo looms as another strong possibility for the Twins. The Reds, his former team, met with him on Tuesday but, as of early Wednesday evening, had not had any more contact. Arroyo is expected to command a three-year deal, which the Twins might be willing to offer.

Pelfrey was 5-13 with a 5.19 ERA last season after recovering from Tommy John surgery, and the hope is that he's stronger and more successful two years removed from surgery. Pelfrey, who made $4.1 million last season, is very comfortable in Minnesota and wants to return.

Boras on Wednesday made his annual showstopping appearance near the media center and addressed developments with several of his clients. He claimed the Twins could have competition for Pelfrey but didn't name other clubs.

"I would say we're getting down to the point where, all of a sudden, here they come,'' Boras said. "Guys check in because this guy throws 93 [miles per hour]. How many are actually serious, you never know. He's going to have a lot of interest and a lot of job opportunities because he's priced right, the term is short, the whole thing.''

Boras and Ryan have done this dance before, which has made negotiations interesting.

"Have you ever been in the same room with Terry for an hour and a half?'' Boras asked. "He is tough on me. He beats me up.''

Ryan acknowledged they have known each other for a long time, and that Boras is well-prepared. But he doesn't agree with who is beating whom up.

"I don't know if that's nice of him to say,'' Ryan said, "but I would say if there's anyone that you would not want to spend an hour and a half negotiating with, it might be Scott.''