UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.  20549FORM 10-Q



[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarter ended June 30, 2006



[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from ___ to ___



Commission File Number 0-14147



QUESTAR PIPELINE COMPANY(Exact name of registrant as specified in charter)



STATE OF UTAH                                                                                      87-0307414

(State or other jurisdiction of                                                            (I.R.S. Employer

incorporation or organization)                                                          Identification No.)

180 East 100 South Street, P.O. Box 45360 Salt Lake City, Utah 84145-0360(Address of principal executive offices)
Registrants telephone number, including area code (801) 324-2400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  [X]     No  [  ]



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ]                              Accelerated filer [  ]                         Non-accelerated filer [X]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]     No  [X]



On July 31, 2006, 6,550,843 shares of the registrants common stock, $1.00 par value, were outstanding (all shares are owned by Questar Corporation).



Registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is filing this Form 10-Q with the reduced disclosure format.

#







Questar Pipeline Company

Form 10-Q for the Quarter Ended June 30, 2006



TABLE OF CONTENTS









Nature of Business



Where You Can Find More Information



Forward-Looking Statements



Glossary of Commonly Used Terms



PART I.

FINANCIAL INFORMATION



Item 1.

Financial Statements(Unaudited)



Consolidated Statements of Income for the three and six months ended

June 30, 2006 and 2005



Condensed Consolidated Balance Sheets as of June 30, 2006

and December 31, 2005



Condensed Consolidated Statements of Cash Flows for the six months ended

June 30, 2006 and 2005



Notes Accompanying the Consolidated Financial Statements



Item 2.

Managements Discussion and Analysis of Financial Condition and

Results of Operations



Item 4.

Controls and Procedures



PART II.

OTHER INFORMATION



Item 6.

Exhibits



Signatures



#





Nature of Business



Questar Pipeline Company (Questar Pipeline or the Company) is an interstate pipeline company that provides natural gas-transportation and underground storage services in Utah, Wyoming and Colorado. As a natural gas company under the Natural Gas Act of 1938, Questar Pipeline and certain subsidiary pipeline companies are regulated by the Federal Energy Regulatory Commission (FERC). The Company also provides non-jurisdictional gas processing and gathering. Questar Pipeline is a wholly-owned subsidiary of Questar Corporation (Questar) headquartered in Salt Lake City, Utah.



Where You Can Find More Information



Both Questar and Questar Pipeline file annual, quarterly, and current reports with the Securities and Exchange Commission (SEC). The public may read and copy these reports and other materials filed with the SEC at its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549-0213. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. The SEC also maintains a website that contains information filed electronically that can be accessed over the Internet at www.sec.gov.



Interested parties can also access financial and other information via Questars website at www.questar.com. Questar and Questar Pipeline make available, free of charge, through the website copies of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to such reports. Access to these reports is provided as soon as reasonably practical after such reports are electronically filed with the SEC. Questars website also contains Statements of Responsibility for Board Committees, Corporate Governance Guidelines and its Business Ethics and Compliance Policy.



Finally, you may request a copy of filings, other than an exhibit to a filing unless that exhibit is specifically incorporated by reference into that filing, at no cost by writing or calling Questar Pipeline, 180 East 100 South Street, P.O. Box 45360, Salt Lake City, Utah 84145-0360 (telephone number (801) 324-2400).



Forward-Looking Statements



This Quarterly Report may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as anticipate, estimate, expect, project, intend, plan, believe, and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, exploration efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.



Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining actual future results. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Among factors that could cause actual results to differ materially are:



•

the risk factors discussed in Part I, Item 1A. of the Companys Annual Report on Form 10-K for the year ended December 31, 2005;

•

general economic conditions, including the performance of financial markets and interest rates;

•

changes in industry trends;

•

changes in laws or regulations; and

•

other factors, most of which are beyond our control.



Questar Pipeline undertakes no obligation to publicly correct or update the forward-looking statements in this Quarterly Report, in other documents, or on the website to reflect future events or circumstances. All such statements are expressly qualified by this cautionary statement.



Glossary of Commonly Used Terms



Btu

One British thermal unit  a measure of the amount of energy required to raise the temperature of a one-pound mass of water one degree Fahrenheit at sea level.

cf

Cubic foot is a common unit of gas measurement. One standard cubic foot equals the volume of gas in one cubic foot measured at standard conditions  a temperature of 60 degrees Fahrenheit and a pressure of 30 inches of mercury (approximately 14.7 pounds per square inch).

dewpoint

A specific temperature and pressure at which hydrocarbons condense to form a liquid.

dth

Decatherms or ten therms. One dth equals one million Btu or approximately one Mcf.

gas

All references to gas  in this report refer to natural gas.

M

Thousand.

MM

Million.





#





PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



QUESTAR PIPELINE COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



|                              | 3 Months Ended | 6 Months Ended
|----------------------------- | -------------- | --------------
|                              | June 30,       | June 30,      
|                              | 2006           | 2005          
|                              |                | (in thousands)
|REVENUES                      |                |               
|From unaffiliated customers   | $24,912        | $19,087       
|From affiliated companies     | 19,827         | 21,517        
|TOTAL REVENUES                | 44,739         | 40,604        
|                              |                |               
|OPERATING EXPENSES            |                |               
|Operating and maintenance     | 8,611          | 8,518         
|General and administrative    | 4,787          | 5,816         
|Other taxes                   | 1,776          | 1,665         
|Depreciation and amortization | 7,836          | 7,259         
|                              |                |               
|TOTAL OPERATING EXPENSES      | 23,010         | 23,258        
|                              |                |               
|OPERATING INCOME              | 21,729         | 17,346        
|                              |                |               
|Interest and other income     | 182            | 515           
|Interest expense              | (5,947)        | (5,567)       
|                              |                |               
|INCOME BEFORE INCOME TAXES    | 15,964         | 12,294        
|                              |                |               
|Income taxes                  | 6,080          | 4,701         
|                              |                |               
|NET INCOME                    | $  9,884       | $  7,593      
|                              |                |               



See notes accompanying the consolidated financial statements

#





QUESTAR PIPELINE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                               | June 30,       | December 31, 
|---------------------------------------------- | -------------- | -------------
|                                               | 2006           | 2005         
|                                               | (in thousands)
|ASSETS                                         |                |              
|Current assets                                 |                |              
|Cash and cash equivalents                      | $      3,787   | $       3,938
|Notes receivable from Questar                  | 11,300         | 9,200        
|Accounts receivable                            | 4,903          | 9,344        
|Accounts receivable from affiliated companies  | 1,060          | 92           
|Materials and supplies, at lower               |                |              
|of average cost or market                      | 3,541          | 3,229        
|Prepaid expenses and other                     | 1,818          | 3,532        
|Total current assets                           | 26,409         | 29,335       
|Property, plant and equipment                  | 1,112,924      | 1,101,512    
|Less accumulated depreciation and amortization | 394,625        | 381,387      
|Net property, plant and equipment              | 718,299        | 720,125      
|Goodwill                                       | 4,185          | 4,185        
|Regulatory assets                              | 9,855          | 10,715       
|Other noncurrent assets                        | 11,163         | 10,019       
|                                               | $  769,911     | $   774,379  
|                                               |                |              
|LIABILITIES AND SHAREHOLDERS EQUITY           |               
|Current liabilities                            |                |              
|Notes payable to Questar                       | $    36,700    | $     58,400 
|Accounts and other payables                    | 15,269         | 14,457       
|Accounts payable to affiliated companies       | 3,280          | 2,677        
|Deferred income taxes  current                | 290            | 290          
|Total current liabilities                      | 55,539         | 75,824       
|Long-term debt                                 | 310,125        | 310,115      
|Deferred income taxes                          | 113,731        | 112,206      
|Other long-term liabilities                    | 21,237         | 15,578       
|                                               |                |              
|Common shareholders equity                    |                |              
|Common stock                                   | 6,551          | 6,551        
|Additional paid-in capital                     | 142,334        | 142,034      
|Retained earnings                              | 120,394        | 112,071      
|Total common shareholders equity              | 269,279        | 260,656      
|                                               | $   769,911    | $   774,379  



See notes accompanying the consolidated financial statements

#





QUESTAR PIPELINE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                            | 6 Months Ended
|------------------------------------------- | --------------
|                                            | June 30,      
|                                            | 2006          
|                                            | (in thousands)
|OPERATING ACTIVITIES                        |               
|Net income                                  | $ 21,323      
|Adjustments to reconcile net income to net  |               
|cash provided from operating activities:    |               
|Depreciation and amortization               | 16,765        
|Deferred income taxes                       | 1,525         
|Share-based compensation                    | 300           
|Net gain from asset sales                   | (10)          
|                                            | 39,903        
|Changes in operating assets and liabilities | 11,555        
|NET CASH PROVIDED FROM OPERATING            |               
|ACTIVITIES                                  | 51,458        
|                                            |               
|INVESTING ACTIVITIES                        |               
|Capital expenditures                        | (12,172)      
|Cash (used in) from disposition of assets   | (2,637)       
|NET CASH USED IN INVESTING ACTIVITIES       | (14,809)      
|                                            |               
|FINANCING ACTIVITIES                        |               
|Change in notes receivable from Questar     | (2,100)       
|Change in notes payable to Questar          | (21,700)      
|Dividends                                   | (13,000)      
|NET CASH USED IN FINANCING ACTIVITIES       | (36,800)      
|                                            |               
|Change in cash and cash equivalents         | (151)         
|Beginning cash and cash equivalents         | 3,938         
|Ending cash and cash equivalents            | $   3,787     
|                                            |               



See notes accompanying the consolidated financial statements



#





QUESTAR PIPELINE COMPANY

NOTES ACCOMPANYING THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



Note 1  Basis of Presentation of Interim Consolidated Financial Statements



The accompanying unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and pursuant to the rules and regulations of the SEC. The interim consolidated financial statements reflect all normal, recurring adjustments and accruals that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations for the interim periods presented. All significant intercompany accounts and transactions were eliminated in consolidation. Interim consolidated financial statements do not include all of the information and notes required by GAAP for audited annual consolidated financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2005. Certain reclassifications were made to prior period financial statements to conform with the current presentation.



The preparation of consolidated financial statements and notes in conformity with GAAP requires that management make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities. Actual results could differ from estimates. The results of operations for the six months ended June 30, 2006, are not necessarily indicative of the results that may be expected for the year ending December 31, 2006, due to a variety of factors discussed in the Forward-Looking Statements section of this report.



Note 2  Share-Based Compensation



Questar issues stock options and restricted shares to certain officers, employees and non-employee directors under its Long Term Stock Incentive Plan (LTSIP). Questar has granted and continues to grant share-based compensation to certain Questar Pipeline employees. Prior to January 1, 2006, Questar and the Company accounted for share-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion (APBO) 25 Accounting for Stock Issued to Employees  and related interpretations. No compensation cost was recorded for stock options issued because the exercise price equaled the market price on the date of grant. The granting of restricted shares results in recognition of compensation cost. Restricted shares are valued at the grant-date market price and amortized to expense over the vesting period.



Questar and the Company implemented SFAS 123R Share-Based Payment, effective January 1, 2006 and chose the modified prospective phase-in method of accounting by SFAS 123R. The modified prospective phase-in method requires recognition of compensation costs for all share-based payments granted, modified or settled after January 1, 2006, as well as for any awards that were granted prior to the implementation date for which the required service has not yet been performed. As a result of adopting SFAS 123R, the Companys income before income taxes for the six months ended June 30, 2006, was approximately $0.1 million lower than if the Company had continued to account for share-based compensation under APBO 25. The pro forma share-based compensation expense impact for the first half of 2005 was approximately $0.1 million lower.



Transactions involving stock options granted to employees of Questar Pipeline under the LTSIP are summarized below:

#







|                           | Outstanding
Options | Price Range     | Weighted-    Average
Price
|-------------------------- | ------------------- | --------------- | --------------------------
|                           |                     |                 |                           
|Balance at January 1, 2006 | 97,835              | $21.38  $48.66 | $36.75                    
|Exercised                  | (15,500)            | 22.95    28.01 | 25.79                     
|Employee transfer          | 4,500               | 27.11           | 27.11                     
|Balance at June 30, 2006   | 86,835              | $21.38  $48.66 | $38.21                    



The number of unvested stock options held by employees of Questar Pipeline has not changed in the first half of 2006.



|Options Outstanding      | Options Exercisable                 | Unvested Options                        
|------------------------ | ----------------------------------- | ----------------------------------------
|Range of exercise
prices | Number outstanding at June 30, 2006 | Weighted-average remaining term in years
|                         |                                     |                                         
|$21.38  $22.95          | 22,335                              | 2.4                                     
|27.11    48.66          | 64,500                              | 8.1                                     
|                         | 86,835                              | 6.6                                     



Restricted shares generally vest in three to five years. The weighted average remaining vesting term of unvested restricted shares at June 30, 2006 was three years. Transactions involving restricted shares held by employees of Questar Pipeline are summarized below:



|                           |        |                 | Weighted Average
|-------------------------- | ------ | --------------- | ----------------
|                           | Shares | Price Range     | Price           
|                           |        |                 |                 
|Balance at January 1, 2006 | 14,000 | $34.90  $51.00 | $47.49          
|Granted                    | 5,125  | 73.50           | 73.50           
|Distributed                | (534)  | 34.90           | 34.90           
|Balance at June 30, 2006   | 18,591 | $34.90  $73.50 | $55.02          



Note 3  Recent Accounting Development





In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (FIN 48). The interpretation applies to all tax positions related to income taxes subject to FASB Statement No. 109 Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position to be reflected in the financial statements. If recognized, the tax benefit is measured as the largest amount of tax benefit that is more-likely-than-not to be realized upon ultimate settlement. FIN 48 is effective January 1, 2007. The Company is evaluating the effect, if any, that FIN 48 will have on its financial statements.



#





Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Summary



Questar Pipeline reported net income of $9.9 million for the second quarter of 2006 compared with $7.6 million in the second quarter of 2005. First half 2006 net income was $21.3 million compared with $15.9 in the 2005 period. The higher net income was due to increased transportation and NGL revenues.



Results of Operations



Following is a summary of Questar Pipelines financial and operating results for the second quarter and first half of 2006 compared with the same periods of 2005:



|                                                   | 3 Months Ended | 6 Months Ended
|-------------------------------------------------- | -------------- | --------------
|                                                   | June 30,       | June 30,      
|                                                   | 2006           | 2005          
|                                                   |                | (in thousands)
|OPERATING INCOME                                   |                |               
|Revenues                                           |                |               
|Transportation                                     | $ 29,579       | $ 26,668      
|Storage                                            | 9,322          | 9,254         
|Gas processing                                     | 1,359          | 1,685         
|NGL and other revenues                             | 4,479          | 2,997         
|Total revenues                                     | 44,739         | 40,604        
|Operating expenses                                 |                |               
|Operating and maintenance                          | 8,611          | 8,518         
|General and administrative                         | 4,787          | 5,816         
|Depreciation and amortization                      | 7,836          | 7,259         
|Other taxes                                        | 1,776          | 1,665         
|Total operating expenses                           | 23,010         | 23,258        
|Operating income                                   | $ 21,729       | $ 17,346      
|                                                   |                |               
|OPERATING STATISTICS                               |                |               
|Natural gas transportation volumes (in Mdth)       |                |               
|For unaffiliated customers                         | 78,159         | 61,393        
|For Questar Gas                                    | 27,281         | 26,212        
|For other affiliated customers                     | 5,828          | 6,505         
|Total transportation                               | 111,268        | 94,110        
|Transportation revenue (per dth)                   | $     0.27     | $    0.28     
|Firm-daily transportation demand at
June 30 (Mdth) | 2,135          | 1,815         



Revenues

Following is a summary of major changes in Questar Pipelines revenues for the three and six months ended June 30, 2006, compared with the same periods of 2005:



|                                       | 3 Months Ended
June 30, 2006
Compared with 2005 | 6 Months Ended
June 30, 2006
Compared with 2005
|-------------------------------------- | ----------------------------------------------- | -----------------------------------------------
|                                       | (in thousands)                                 
|Transportation                         |                                                 |                                                
|New transportation contracts           | $4,008                                          | $8,458                                         
|Expiration of transportation contracts | (545)                                           | (1,109)                                        
|Other transportation                   | (552)                                           | (953)                                          
|Storage                                | 68                                              | 49                                             
|Gas processing                         | (326)                                           | (676)                                          
|NGL and other revenues                 |                                                 |                                                
|Change in NGL revenues                 | 1,735                                           | 3,215                                          
|Change in gathering revenue            | 52                                              | 217                                            
|Park and loan revenue                  | (334)                                           | 650                                            
|Other                                  | 29                                              | (45)                                           
|Increase                               | $4,135                                          | $9,806                                         



As of June 30, 2006, Questar Pipeline had firm-transportation contracts of 2,135 Mdth per day compared with 1,815 Mdth per day as of June 30, 2005. Questar Pipeline has expanded its transportation system in response to growing regional natural gas production and transportation demand. In the second quarter of 2005, Questar Pipeline began operating a lateral to an electric generation power plant with a capacity of 190 Mdth per day. In the fourth quarter of 2005, Questar Pipeline completed an expansion of its southern system, which added capacity of 102 Mdth per day. On January 1, 2006, Questar Pipeline subsidiary, Questar Overthrust Pipeline, placed an interconnection with Kern River Pipeline in service, which added capacity of 220 Mdth per day. Each of these expansion projects are fully subscribed with long-term contracts.



Questar Gas is Questar Pipelines largest transportation customer with contracts for 951 Mdth per day, including 50 Mdth per day for winter-peaking service. The majority of Questar Gass transportation contract demand extends through mid 2017.



Questar Pipelines primary storage facility is Clay Basin in eastern Utah. This facility is 100% subscribed under long-term contracts. In addition to Clay Basin, Questar Pipeline also owns and operates three smaller aquifer gas storage facilities. Questar Gas has contracted for 26% of firm-storage capacity at Clay Basin for terms extending from three to 14 years and 100% of the firm-storage capacity at the aquifer facilities for terms extending for 13 years.



Questar Pipeline charges FERC-approved transportation and storage rates that are based on straight-fixed-variable rate design. Under this rate design all fixed costs of providing service including depreciation and return on investment are recovered through the demand charge. About 95% of Questar Pipeline costs are fixed and recovered through these demand charges. Questar Pipelines earnings are driven primarily by demand revenues from firm shippers. Since only about 5% of operating costs are recovered through volumetric charges, changes in transportation volumes do not have a significant impact on earnings.



NGL revenues increased in the second quarter and first half of 2006 over the same periods of 2005. NGL volumes increased 92% in the second quarter and 77% in the first half, and NGL prices increased 29% in the second quarter and 36% in the first half relative to the prior periods. NGL revenues were also impacted by the fuel-gas reimbursement percentage proceedings as discussed below.



Revenues from park and loan services increased in the first half of 2006 over the first half of 2005 due to increased demand. Questar Pipeline shares 75% of its park and loan revenues with customers once it has received revenues equal to the cost of service. Beginning in the second quarter additional revenues received in 2006 are being shared with customers.



Fuel-Gas Reimbursement Percentage (FGRP)

During the fourth quarter of 2004, the FERC issued an order to Questar Pipeline in a case involving the annual FGRP. The FERC previously granted Questar Pipelines request to increase the FGRP effective January 1, 2004. In its order the FERC approved the FGRP but also ruled that Questar Pipeline was required to credit to transportation customers proceeds from the sale of natural gas liquids recovered from its hydrocarbon dewpoint facilities at the Kastler plant in northeastern Utah. Questar Pipeline accrued a potential liability equal to any liquid revenues from the dewpoint plant. Through June 30, 2005, Questar Pipeline had reduced revenues by $5.4 million as a credit to customers, including $0.7 million recorded in the first half of 2005.



Questar Pipeline made an annual FGRP filing with the FERC on November 30, 2004, requesting an increase in the FGRP to 2.6%. On December 30, 2004, the FERC approved the request on an interim basis subject to refund and final resolution of the 2004 FGRP proceeding. Several shippers filed comments with the FERC protesting the FGRP level.



On June 17, 2005, Questar Pipeline filed an uncontested offer of settlement with the FERC to resolve the outstanding issues in the 2004 and 2005 FGRP filings. This settlement with customers was approved July 26, 2005, and contains the following terms: (a) the settlement will cover the period from June 1, 2005 through December 31, 2007; (b) no adjustments will be made to FGRP amounts collected by Questar Pipeline prior to June 2005; (c) one-half of the Kastler plant liquid revenues from August 2001 through December 2007 will be refunded to customers and the remaining revenues will be retained by Questar Pipeline; and (d) Questar Pipeline will reduce the FGRP amount collected from customers from 2.6% to 2.1% effective June 1, 2005. This percentage consists of 1.95% of ongoing FGRP related volumes and 0.15% of prior period amortization of volumes. If actual ongoing volumes are less than the 1.95%, the difference will be shared equally with customers beginning January 2006. The FGRP rate for 2006 is 1.84% plus the 0.15% amortization of prior volumes.



Questar Pipeline recorded the impact of the settlement in third quarter 2005 increasing liquid revenues by $2.7 million and net income by $1.7 million.



Expenses

Operating, maintenance, general and administrative expenses decreased $0.9 million in the second quarter of 2006 and $1.6 million in the first half of 2006 compared with the 2005 periods. Beginning in July 2005 customers at the Companys carbon dioxide processing plant began supplying their own fuel gas, which accounted for about half of the decrease. Operating, maintenance, general and administrative expenses per decatherm transported declined from $0.14 in the first half of 2005 to $0.12 in the first half of 2006.



Depreciation expense increased 8% in the second quarter of 2006 and 9% in the first half of 2006 over the same periods of 2005 due to investment in pipeline expansions.



Clay Basin Storage

Questar Pipeline conducts periodic pressure tests on its Clay Basin storage facility. Beginning with a test in April 2002, the Company noted a discrepancy between the book volumes of cushion gas at Clay Basin and the volumes implied by pressure data. Questar Pipeline retained a reservoir consultant to model the reservoir and determine the size and cause of the discrepancy. The Company conducted five additional pressure tests from April 2004 to April 2006 to validate the model.



The reservoir model indicates from 0 to 3.8 Bcf of gas may be missing from Clay Basin, with the most likely amount of 3.2 Bcf. The gas loss is due to a combination of cumulative imprecision inherent in natural gas measurement devices and reservoir heterogeneity that impacts storage reservoir performance. There is no indication that the reservoir is leaking. The Clay Basin reservoir is functioning as expected to meet customer requirements.



Questar Pipeline has discussed with the FERC the recording of the loss of gas as a reduction of native gas remaining in the reservoir that would not impact Questar Pipeline net income. Alternatively, if the FERC requires Questar Pipeline to adjust recoverable cushion gas, earnings could be reduced by about $3 million after tax.







Item 4.  Controls and Procedures.



Evaluation of Disclosure Controls and Procedures.

The Companys Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by the report (the Evaluation Date). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Companys disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company, including its consolidated subsidiaries, required to be included in the Companys reports filed or submitted under the Exchange Act. The Companys Chief Executive Officer and Chief Financial Officer also concluded that the controls and procedures were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Companys management including its principal executive and financial officers or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure.



Changes in Internal Controls.

Since the Evaluation Date, there have not been any changes in the Companys internal controls or other factors during the most recent fiscal quarter that could materially affect such controls.



PART II.  OTHER INFORMATION



Item 6.  Exhibits



The following exhibits are filed as part of this report:



Exhibit No.

Exhibits



31.1.

Certification signed by R. Allan Bradley, Questar Pipeline Companys President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2.

Certification signed by S. E. Parks, Questar Pipeline Companys Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32.

Certification signed by R. Allan Bradley and S. E. Parks, Questar Pipeline Companys President and Chief Executive Officer and Vice President and Chief Financial Officer, respectively, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

#







SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



QUESTAR PIPELINE COMPANY

(Registrant)







August 8, 2006

/s/R. Allan Bradley_____________________

R. Allan Bradley

President and Chief Executive Officer





August 8, 2006

/s/S. E. Parks_________________________

S. E. Parks

Vice President and Chief Financial Officer



Exhibits List



Exhibit No.

Exhibits



31.1.

Certification signed by R. Allan Bradley, Questar Pipeline Companys President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2.

Certification signed by S. E. Parks, Questar Pipeline Companys Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32.

Certification signed by R. Allan Bradley and S. E. Parks, Questar Pipeline Companys President and Chief Executive Officer and Chief Financial Officer, respectively, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

#





Exhibit 31.1.



CERTIFICATION



I, R. Allan Bradley, certify that:



1.

I have reviewed this quarterly report of Questar Pipeline Company on Form 10-Q for the period ending June 30, 2006;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and we have:



a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b)

evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



c)

disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.



5.

The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and



b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.





August 8, 2006

/s/R. Allan Bradley



R. Allan Bradley

President and Chief Executive Officer



Exhibit 31.2.



CERTIFICATION



I, S. E. Parks, certify that:





1.

I have reviewed this quarterly report of Questar Pipeline Company on Form 10-Q for the period ending June 30, 2006;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and we have:



a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b)

evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



c)

disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.



5.

The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and



b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.





August 8, 2006

/s/S. E. Parks



S. E. Parks

Vice President and Chief Financial Officer

Exhibit No. 32.



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002





In connection with the Quarterly Report of Questar Pipeline Company on Form 10-Q for the period ending June 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the Report), R. Allan Bradley, President and Chief Executive Officer of the Company, and S. E. Parks, Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:



(1)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



QUESTAR PIPELINE COMPANY







August 8, 2006

/s/R. Allan Bradley



R. Allan Bradley

President and Chief Executive Officer







August 8, 2006

/s/S. E. Parks



S. E. Parks

Vice President and Chief Financial Officer