UNITED STATES SECURITIES AND EXCHANGE COMMISSION  Washington, D.C.  20549  FORM 10-Q  [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarter ended March 31, 2008  [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from ___ to ___  QUESTAR PIPELINE COMPANY (Exact name of registrant as specified in its charter)  STATE OF UTAH000-1414787-0307414(State or other jurisdiction of
Incorporation or organization)(Commission File No.)(I.R.S. Employer
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, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.  (Check one):  Large accelerated filer    [   ]Accelerated filer
[   ]Non-accelerated filer      [X]    (Do not check if a smaller reporting company)Smaller reporting company    [   ]  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 April 30, 2008, 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 with the reduced disclosure format.     Questar Pipeline Company Form 10-Q for the Quarter Ended March 31, 2008  TABLE OF CONTENTS  Page   PART I. FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS (Unaudited) 3  Consolidated Statements of Income for the three months ended March 31, 2008 and 2007 3  Condensed Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007 4  Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007 5  Notes Accompanying the Condensed Consolidated Financial Statements 6  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 6  ITEM 4T. CONTROLS AND PROCEDURES 9  PART II. OTHER INFORMATION  ITEM 6. EXHIBITS 9  Signatures 10       Questar Pipeline 2008 Form 10-Q 2   PART I. FINANCIAL INFORMATION   ITEM 1. FINANCIAL STATEMENTS.   QUESTAR PIPELINE COMPANYCONSOLIDATED STATEMENTS OF INCOME(Unaudited)3 Months Ended March 31,20082007(in millions)REVENUESFrom unaffiliated customers$44.7$31.7From affiliated companies19.520.6Total Revenues64.252.3OPERATING EXPENSESOperating and maintenance11.09.3General and administrative7.67.1Depreciation and amortization10.88.6Cost of goods sold (excluding operating expenses shown separately)0.21.6Other taxes2.22.2Total Operating Expenses31.828.8Net gain from asset sales0.10.3OPERATING INCOME32.523.8Interest and other income0.80.2Interest expense(8.1)(6.2)INCOME BEFORE INCOME TAXES25.217.8Income taxes9.36.6NET INCOME$15.9$11.2   See notes accompanying the condensed consolidated financial statements  Questar Pipeline 2008 Form 10-Q 3   QUESTAR PIPELINE COMPANYCONDENSED CONSOLIDATED BALANCE SHEETSMarch 31,December 31,20082007(Unaudited)(in millions)ASSETSCurrent AssetsCash and cash equivalents$       3.6$      7.6Notes receivable from Questar97.114.1Accounts receivable, net14.214.8Accounts receivable from affiliates9.611.9Assets held for sale20.0Materials and supplies7.16.4Prepaid expenses and other2.03.0Deferred income taxes  current0.40.4Total Current Assets154.058.2Property, Plant and Equipment1,468.21,490.5Accumulated depreciation and amortization(442.0)(441.9)Net Property, Plant and Equipment1,026.21,048.6Goodwill4.24.2Regulatory and other noncurrent assets, net14.212.7Total Assets$1,198.6$1,123.7LIABILITIES AND COMMON SHAREHOLDERS EQUITYCurrent LiabilitiesNotes payable to Questar$     0.3$   136.9Accounts payable and accrued expenses41.238.2Accounts payable to affiliates4.25.8Current portion of long-term debt58.358.3Total Current Liabilities104.0239.2Long-term debt, less current portion451.8251.9Deferred income taxes128.4125.1Other long-term liabilities21.123.5COMMON SHAREHOLDERS EQUITYCommon stock6.66.6Additional paid-in capital341.1340.9Retained earnings145.6136.5Total Common Shareholders Equity493.3484.0Total Liabilities and Common Shareholders Equity$1,198.6$1,123.7   See notes accompanying the condensed consolidated financial statements  Questar Pipeline 2008 Form 10-Q 4   QUESTAR PIPELINE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)3 Months Ended March 31,20082007(in millions)OPERATING ACTIVITIESNet income$    15.9$   11.2Adjustments to reconcile net income to net cashprovided from operating activities:Depreciation and amortization11.49.1Deferred income taxes3.31.9Share-based compensation0.20.2Net gain from asset sales(0.1)(0.3)Changes in operating assets and liabilities9.611.1NET CASH PROVIDED FROM OPERATING ACTIVITIES40.333.2INVESTING ACTIVITIESCapital expenditures(16.0)(24.7)Cash used in asset dispositions(0.1)Proceeds from asset dispositions0.10.4Affiliated-company property, plant and equipment transfer0.6NET CASH USED IN INVESTING ACTIVITIES(16.0)(23.7)FINANCING ACTIVITIESLong-term debt issued, net of issuance costs198.1Change in notes receivable from Questar(83.0)(3.2)Change in notes payable to Questar(136.6)(1.1)Dividends paid(6.8)(6.6)NET CASH USED IN FINANCING ACTIVITIES(28.3)(10.9)Change in cash and cash equivalents(4.0)(1.4)Beginning cash and cash equivalents7.62.8Ending cash and cash equivalents$     3.6$   1.4   See notes accompanying the condensed consolidated financial statements  Questar Pipeline 2008 Form 10-Q 5  QUESTAR PIPELINE COMPANY  NOTES ACCOMPANYING THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Note 1  Nature of Business  Questar Pipeline Company (Questar Pipeline or Company) is a wholly-owned subsidiary of Questar Corporation (Questar). The Company is an interstate pipeline company that provides natural gas transportation and underground-storage services in the Rocky Mountain states of 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) as to rates and charges for storage and transportation of natural gas in interstate commerce, construction of new facilities, and extensions or abandonments of service and facilities, accounting and other activities. Questar Transportation Service, a wholly-owned subsidiary of Questar Pipeline, provides processing and treatment services.  Note 2  Basis of Presentation of Interim Consolidated Financial Statements  The interim condensed consolidated financial statements contain the accounts of Questar Pipeline and its majority-owned or controlled subsidiaries. The condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the instructions for quarterly reports on Form 10-Q and Regulations S-X and S-K. All significant intercompany accounts and transactions have been eliminated in consolidation.  The condensed 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. Interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for audited annual consolidated financial statements. These condensed 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, 2007. Certain reclassifications were made to prior-period financial statements to conform with the current presentation.  The preparation of the condensed 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 three months ended March 31, 2008, are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.  Note 3  Financing  On November 13, 2007, Questar Pipeline filed a shelf registration with the Securities and Exchange Commission to sell up to $200 million of debt securities with intent to use the net proceeds from the sale of the securities to repay intercompany demand notes as well as for general corporate purposes, including working capital and capital expenditures. On January 10, 2008, Questar Pipeline sold $200 million of 10-year notes with a 5.83% coupon interest rate.  Note 4  Sale of Processing Plant and Gathering Lines  During the first quarter of 2008, Questar Transportation Services, a subsidiary of Questar Pipeline, reached agreement to sell its carbon dioxide processing plant and some associated gathering facilities. The investment in these facilities of $20.0 million was classified as an asset held for sale. The transaction closed in April 2008 and resulted in a pre-tax gain of about $5 million.   ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  The following discussion updates information as to Questar Pipelines financial condition provided in its previous Form 10-K filing, and analyzes the changes in the results of operations between the three-month periods ended March 31, 2008 and 2007. For definitions of commonly used terms found in this Form 10-Q, please refer to the Glossary of Commonly Used Terms provided in the Companys 2007 Form 10-K.  RESULTS OF OPERATIONS  Questar Pipeline, which provides interstate natural gas-transportation and storage services, reported first quarter 2008 net income of $15.9 million compared with $11.2 million in 2007, a 42% increase. Operating income increased $8.7 million, or 37%, in the first quarter 2008-to-2007 comparison due primarily to transportation-system expansions that were completed in the fourth quarter of 2007. Following is a summary of Questar Pipeline financial and operating results:  Questar Pipeline 2008 Form 10-Q 6   3 Months Ended March 31,20082007Change(in millions)Operating IncomeRevenuesTransportation$44.2$30.9$  13.3Storage9.69.6Gas processing1.72.0(0.3)NGL sales4.02.51.5Energy services3.54.7(1.2)Other1.22.6(1.4)Total revenues64.252.311.9Operating expensesOperating and maintenance11.09.31.7General and administrative7.67.10.5Depreciation and amortization10.88.62.2Cost of goods sold0.21.6(1.4)Other taxes2.22.2Operating expenses31.828.83.0Net gain from asset sales0.10.3(0.2)Operating income$32.5$23.8$   8.7Operating StatisticsNatural gas-transportation volumes (MMdth)For unaffiliated customers129.876.952.9For Questar Gas43.242.11.1For other affiliated customers0.94.7(3.8)Total transportation173.9123.750.2Transportation revenue (per dth)$0.25$0.25Firm daily transportation demand at March 31, (Mdth)3,1692,233936Natural gas processingNGL sales (MMgal)2.52.5NGL sales price (per gal)$1.61$0.97$0.64  Revenues Following is a summary of major changes in Questar Pipeline revenues for the first quarter of 2008 compared with 2007:  Change in Revenue2007 to 2008(in millions)TransportationNew capacity lease$  7.3New transportation contracts4.9Expired transportation contracts(1.2)Other2.3Gas processing(0.3)NGL sales1.5Energy services(1.2)Other(1.4)Increase$11.9  Questar Pipeline 2008 Form 10-Q 7     As of March 31, 2008, Questar Pipeline had firm-transportation contracts of 3,169 Mdth per day compared with 2,233 Mdth per day as of March 31, 2007. Questar Pipeline has expanded its transportation system in response to growing regional natural gas production and transportation demand. In November 2007, Questar Pipeline placed an expansion of its southern system in service. This increased daily demand by 175 Mdth and first quarter 2008 revenues by $4.1 million. In December 2007, Questar Overthrust Pipeline placed its expansion from Kanda to Wamsutter in service. This increased daily demand by 625 Mdth and first quarter 2008 revenues by $7.3 million. This expansion also increased the daily demand from Kanda to Opal by 125 Mdth and first quarter 2008 revenues by $0.6 million.  Questar Gas is Questar Pipelines largest transportation customer with contracts for 901 Mdth per day. The majority of the Questar Gas transportation contracts extend through mid 2017.  Questar Pipeline owns and operates the Clay Basin underground storage complex 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 one to 12 years and 100% of the firm-storage capacity at the aquifer facilities for terms extending for 11 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 60% in the first quarter of 2008 over 2007 due to 66% higher prices.  Expenses Operating and maintenance expenses increased by 18% to $11.0 million in the first quarter of 2008 compared to $9.3 million in the first quarter of 2007. The increase was a result of system expansions and higher labor and service costs. General and administrative expenses increased by 7% to $7.6 million in the first quarter of 2008. Operating, maintenance, general and administrative expenses per dth transported declined to $0.11 in the first quarter of 2008 compared with $0.13 in the first quarter of 2007 because transportation volumes increased 41%. Operating, maintenance, general and administrative expenses include processing and storage costs.  Depreciation expense increased 26% in the first quarter of 2008 compared to the first quarter of 2007 due to investment in pipeline expansions.  Sale of processing plant and gathering lines During the first quarter of 2008, Questar Transportation Services, a subsidiary of Questar Pipeline, reached agreement to sell its carbon dioxide processing plant and some associated gathering facilities. The investment in these facilities of $20.0 million was classified as an asset held for sale. The transaction closed in April 2008 and resulted in a pre-tax gain of about $5 million.  Salt Cavern Storage Project Questar Pipeline has an investment of $11.5 million in a potential salt cavern storage project located in southwestern Wyoming. Questar Pipeline has been working with several other parties to update a prior evaluation of technical and economic feasibility of this project. If these parties determine that the project is feasible, they would have a right to participate in the project. If they determine that the project is not feasible, Questar Pipeline may sell or abandon the project and may impair this investment.  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.  Questar Pipeline 2008 Form 10-Q 8   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, 2007; · 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 the Companys 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 Web site to reflect future events or circumstances. All such statements are expressly qualified by this cautionary statement.   ITEM 4T.  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, as of March 31, 2008. The effectiveness of the Companys internal control over financial reporting was assessed using criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control  Integrated Framework. Based on such evaluation, such officers have concluded that, as of March 31, 2008, 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.  This quarterly report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting.  Changes in Internal Controls. There were no changes in the Companys internal controls over financial reporting that occurred during the quarter ended March 31, 2008, that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.    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.  Questar Pipeline 2008 Form 10-Q 9    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)    May 7, 2008 /s/R. Allan Bradley R. Allan Bradley President and Chief Executive Officer   May 7, 2008 /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.   Questar Pipeline 2008 Form 10-Q 10