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 June 30, 2009  [  ] 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [   ] 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 July 31, 2009, 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 June 30, 2009  TABLE OF CONTENTS  Page   PART I. FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS (Unaudited) 3  Consolidated Statements of Income for the three and six months ended June 30, 2009 and 2008 3  Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008 4  Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008 5  Notes Accompanying the Condensed Consolidated Financial Statements 6  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7  ITEM 4. CONTROLS AND PROCEDURES 9  PART II. OTHER INFORMATION  ITEM 6. EXHIBITS 10  SIGNATURES 10       Questar Pipeline 2009 Form 10-Q 2   PART I. FINANCIAL INFORMATION   ITEM 1. FINANCIAL STATEMENTS.  QUESTAR PIPELINE COMPANYCONSOLIDATED STATEMENTS OF INCOME(Unaudited)3 Months Ended June 30,6 Months Ended June 30,2009200820092008(in millions)REVENUESFrom unaffiliated customers$43.0$43.3$ 83.7$ 88.0From affiliated companies18.318.737.438.2Total Revenues61.362.0121.1126.2OPERATING EXPENSESOperating and maintenance9.68.417.717.6General and administrative8.710.117.319.5Depreciation and amortization10.910.521.721.3Impairment10.610.6Other taxes2.12.14.44.3Cost of goods sold (excluding operating expenses
shown separately)0.30.61.10.8Total Operating Expenses31.642.362.274.1Net gain from asset sales0.23.90.34.0OPERATING INCOME29.923.659.256.1Interest and other income0.34.40.65.2Income from unconsolidated affiliate0.91.9Interest expense(7.4)(8.2)(14.8)(16.3)INCOME BEFORE INCOME TAXES23.719.846.945.0Income taxes(8.7)(7.1)(17.2)(16.4)NET INCOME$15.0$12.7$ 29.7$ 28.6   See notes accompanying the condensed consolidated financial statements


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QUESTAR PIPELINE COMPANYCONDENSED CONSOLIDATED BALANCE SHEETSJune 30,
2009December 31,
2008(Unaudited)(in millions)ASSETSCurrent AssetsCash and cash equivalents$       0.4$      1.8Notes receivable from affiliates37.640.6Accounts receivable, net15.820.5Accounts receivable from affiliates16.417.2Materials and supplies6.46.2Prepaid expenses and other3.13.2Deferred income taxes  current0.70.7Total Current Assets80.490.2Property, Plant and Equipment1,539.81,507.7Accumulated depreciation and amortization(490.5)(471.4)Net Property, Plant and Equipment1,049.31,036.3Investment in unconsolidated affiliate28.927.6Goodwill4.24.2Regulatory and other noncurrent assets, net15.217.9Total Assets$1,178.0$1,176.2LIABILITIES AND COMMON SHAREHOLDERS EQUITYCurrent LiabilitiesNotes payable to affiliates$      0.2$       0.2Accounts payable and accrued expenses23.447.5Accounts payable to affiliates3.03.1Current portion of long-term debt42.042.0Total Current Liabilities68.692.8Long-term debt, less current portion409.8409.8Deferred income taxes147.6136.1Other long-term liabilities19.821.8COMMON SHAREHOLDERS EQUITYCommon stock6.66.6Additional paid-in capital342.1341.6Retained earnings183.5167.5Total Common Shareholders Equity532.2515.7Total Liabilities and Common Shareholders Equity$1,178.0$1,176.2   See notes accompanying the condensed consolidated financial statements


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QUESTAR PIPELINE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)6 Months Ended June 30,20092008(in millions)OPERATING ACTIVITIESNet income$  29.7$  28.6Adjustments to reconcile net income to net cash
provided from operating activities:Depreciation and amortization23.122.5Deferred income taxes11.5Share-based compensation0.50.3Impairment10.6Net (gain) from asset sales(0.3)(4.0)(Income) from unconsolidated affiliate(1.9)Distribution from unconsolidated affiliate0.6Changes in operating assets and liabilities(6.1)(11.0)Net Cash Provided From Operating Activities57.147.0INVESTING ACTIVITIESCapital ExpendituresProperty, plant and equipment(49.1)(22.2)Other investing activities(5.0)Total Capital Expenditures(49.1)(27.2)Cash used in asset dispositions(0.1)(0.1)Proceeds from asset dispositions1.426.0Net Cash Used In Investing Activities(47.8)(1.3)FINANCING ACTIVITIESLong-term debt issued, net of issuance costs198.1Change in notes receivable from affiliates3.0(101.2)Change in notes payable to affiliates(136.7)Dividends paid(13.7)(13.5)Net Cash Used In Financing Activities(10.7)(53.3)Change in cash and cash equivalents(1.4)(7.6)Beginning cash and cash equivalents1.87.6Ending cash and cash Equivalents$     0.4$       -   See notes accompanying the condensed consolidated financial statements


Questar Pipeline 2009 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 the 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 gathering, 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 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 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 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, 2008. Certain reclassifications were made to prior-period financial statements to conform with the current presentation.  Questar Pipeline uses the equity method to account for its investment in unconsolidated affiliates where it does not have control, but has significant influence. Generally, the investment in unconsolidated affiliates on the Companys consolidated balance sheets equals the Companys proportionate share of equity reported by the unconsolidated affiliates. Investment is assessed for possible impairment when events indicate that the fair value of the investment may be below the Companys carrying value. When such a condition is deemed to be other than temporary, the carrying value of the investment is written down to its fair value, and the amount of the write-down is included in the determination of net income.  White River Hub, LLC, a limited liability corporation and FERC-regulated transporter of natural gas, is Questar Pipelines only unconsolidated affiliate. Questar Pipeline owns 50% of White River Hub, LLC, and is the operator.  The preparation of the consolidated financial statements and notes in conformity with GAAP requires that management make estimates and assumptions that affect the amounts of revenues, expenses, assets and liabilities and disclosure of contingent assets and liabilities. Actual results could differ from estimates. The results of operations for the three and six months ended June 30, 2009, are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.  The condensed consolidated financial statements reflect management's consideration of known subsequent events as of August 7, 2009, the date that the consolidated financial statements were issued.  All dollar amounts in this quarterly report on Form 10-Q are in millions, except where otherwise noted.  Note 3  Fair-Value Measures  In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) Financial Accounting Standard (FAS) 107-1 and Accounting Principles Board 28-1 "Interim Disclosures about Fair Value of Financial Instruments," which requires disclosures about fair value of financial instruments for interim periods as well as in annual financial statements. The FSP is effective for interim reporting periods ending after June 15, 2009. The Company adopted FSP FAS 107-1 in the second quarter of 2009. The following table discloses the fair value and related carrying amount of certain financial instruments not disclosed in other notes to the condensed consolidated financial statements in this quarterly report on Form 10-Q:


Questar Pipeline 2009 Form 10-Q 6


CarryingEstimatedCarryingEstimatedAmountFair ValueAmountFair ValueJune 30, 2009December 31, 2008(in millions)Financial assetsCash and cash equivalents$    0.4$    0.4$    1.8$    1.8Notes receivable from affiliates37.637.640.640.6Financial liabilitiesNotes payable to affiliates0.20.20.20.2Long-term debt452.2466.4452.2457.2  Cash and cash equivalents, notes receivable from affiliates and notes payable to affiliates  the carrying amount approximates fair value.  Long-term debt  the fair value of fixed-rate debt is based on the discounted present value of cash flows using the Company's current borrowing rates.  Note 4  Recent Accounting Developments  In April 2009, the FASB issued FSP FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly," which provides additional guidance for estimating fair value when the level of activity for the asset or liability has significantly decreased. This FSP clarifies and includes additional factors to consider in determining whether there has been a significant decrease in market activity for an asset or liability and estimating fair value when the market activity for an asset or liability has declined significantly. The scope of this FSP does not include assets and liabilities measured under Level 1 inputs. FSP FAS 157-4 is to be applied prospectively to all fair value measurements where appropriate and its provisions are in effect for interim and annual periods ending after June 15, 2009. The adoption of FSP FAS 157-4 did not have a material impact on financial position or results of operations.  In May 2009, the FASB issued Statement of Financial Accounting Standards (SFAS) 165, "Subsequent Events" to establish a general standard of accounting for and disclosure of events that occur after the close of the period but before financial statements are issued or are available to be issued. The provisions of this statement are in effect for interim and annual periods ending after June 15, 2009. The adoption of SFAS 165 did not have a material impact on financial position or results of operations.   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- and six-month periods ended June 30, 2009 and 2008. 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 2008 Form 10-K.  RESULTS OF OPERATIONS  Questar Pipeline, which provides interstate natural gas-transportation and storage services, reported second quarter 2009 net income of $15.0 million compared with $12.7 million in 2008, an 18% increase. Net income for the first half of 2009 was $29.7 million compared with $28.6 for the first half of 2008. The second quarter of 2008 included one-time items that reduced net income by $2.1 million. Following is a summary of Questar Pipeline financial and operating results:  3 Months Ended June 30,6 Months Ended June 30,20092008Change20092008Change(in millions)Operating IncomeRevenuesTransportation$43.3$43.2$  0.1$86.0$87.4($1.4)Storage9.39.318.918.9


Questar Pipeline 2009 Form 10-Q 7


NGL sales2.23.4(1.2)4.07.4(3.4)Energy services3.24.3(1.1)7.27.8(0.6)Gas processing0.91.0(0.1)1.82.7(0.9)Other2.40.81.63.22.01.2Total Revenues61.362.0(0.7)121.1126.2(5.1)Operating expensesOperating and maintenance9.68.41.217.717.60.1General and administrative8.710.1(1.4)17.319.5(2.2)Depreciation and amortization10.910.50.421.721.30.4Impairment10.6(10.6)10.6(10.6)Other taxes2.12.14.44.30.1Cost of goods sold0.30.6(0.3)1.10.80.3Total Operating Expenses31.642.3(10.7)62.274.1(11.9)Net gain from asset sales0.23.9(3.7)0.34.0(3.7)Operating Income$29.9$23.6$  6.3$59.2$56.1$3.1Operating StatisticsNatural gas-transportation volumes (MMdth)For unaffiliated customers161.8157.74.1315.7287.528.2For Questar Gas26.730.1(3.4)71.173.3(2.2)For other affiliated customers1.41.5(0.1)2.62.40.2Total Transportation189.9189.30.6389.4363.226.2Transportation revenue (per dth)$0.23$0.23$0.22$0.24($0.02)Firm daily transportation demand at June 30, (including White River Hub of 1,005 in 2009 in Mdth)4,2213,1241,097Natural gas processingNGL sales (MMgal)2.71.51.25.74.01.7NGL sales price (per gal)$0.81$2.24($1.43)$0.70$1.85($1.15)  Revenues As of June 30, 2009, Questar Pipeline had firm-transportation contracts of 4,221 Mdth per day, including 1,005 Mdth per day from Questar Pipeline's 50% ownership of White River Hub, compared with 3,124 Mdth per day as of June 30, 2008. The White River Hub was placed in service in December 2008. Questar Pipeline has expanded its transportation system in response to growing regional natural gas production and transportation demand.  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.  Transportation revenues decreased $1.4 million in the first half of 2009 compared to the first half of 2008, primarily because of an adjustment to an accrual for sharing of interruptible transportation revenues that was recorded in the first quarter of 2008.  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 9 years.  Questar Pipeline charges FERC-approved transportation and storage rates that are based on a 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 sales were $1.2 million lower in the second quarter of 2009 compared with the second quarter of 2008 and $3.4 million lower in the first half of 2009 compared with the first half of 2008. NGL volumes were 43% higher in the first half of 2009, but NGL prices were 62% lower.


Questar Pipeline 2009 Form 10-Q 8


Other revenues were higher in the periods ended June 30, 2009 due primarily to $1.3 million received from storage customers in the second quarter of 2009. Under a stipulation, these customers were required to pay the difference between the cost-of-service for a gas-processing facility and liquid revenues received from this facility for the 12 months ended May 2009.  Expenses Operating and maintenance expenses increased by 14% to $9.6 million in the second quarter of 2009 compared to $8.4 million in the second quarter of 2008. Operating and maintenance expenses increased 1% in the first half of 2009 compared with the first half of 2008. The increase was due to transportation fees of the White River Hub. General and administrative expenses decreased by 14% to $8.7 million in the second quarter of 2009 and decreased by 11% to $17.3 million in the first half of 2009. Operating, maintenance, general and administrative expenses per dth transported declined to $0.09 in the first half of 2009 compared with $0.10 in the first half of 2008 because transportation volumes increased 7% and costs decreased 6%. Operating, maintenance, general and administrative expenses include processing and storage costs.  Depreciation expense increased 2% in the first half of 2009 compared to the first half of 2008 due to plant additions.  Sale of processing plant and gathering lines Questar Transportation Services, a subsidiary of Questar Pipeline, sold a carbon dioxide processing plant and some associated gathering facilities in the second quarter of 2008. The net investment in these facilities was $20.0 million. The transaction closed in April 2008 and resulted in a pre-tax gain of $3.9 million.  Salt cavern storage project impairment Questar Pipeline impaired the entire $10.6 million investment in a potential salt cavern storage project located in southwestern Wyoming in the second quarter of 2008 based on a technical and economic evaluation of the project.  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, 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, 2008; · 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 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) as of June 30, 2009. Based on such evaluation, such officers have concluded that, as of June 30, 2009, 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


Questar Pipeline 2009 Form 10-Q 9


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. There were no changes in the Companys internal controls over financial reporting that occurred during the quarter ended June 30, 2009, 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  12. Ratio of Earnings to Fixed Charges.  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 Richard J. Doleshek, Questar Pipeline Companys Executive 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 Richard J. Doleshek, Questar Pipeline Companys President and Chief Executive Officer and Executive 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 7, 2009 /s/R. Allan Bradley R. Allan Bradley President and Chief Executive Officer   August 7, 2009 /s/Richard J. Doleshek Richard J. Doleshek Executive Vice President and Chief Financial Officer


Questar Pipeline 2009 Form 10-Q 10


Exhibits List  Exhibit No. Exhibits  12. Ratio of Earnings to Fixed Charges.  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 Richard J. Doleshek, Questar Pipeline Companys Executive 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 Richard J. Doleshek, Questar Pipeline Companys President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, respectively, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


Questar Pipeline 2009 Form 10-Q 11