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

(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         For the quarterly period ended JUNE 30, 2002

                                       OR


[   ]    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 1-4169


                       TEXAS GAS TRANSMISSION CORPORATION
             (Exact name of registrant as specified in its charter)

                    DELAWARE                               61-0405152
         (State or other jurisdiction of                (I.R.S. Employer
         incorporation or organization)                Identification No.)


    3800 FREDERICA STREET, OWENSBORO, KENTUCKY         42301
          (Address of principal executive offices)   (Zip Code)

    Registrant's telephone number, including area code: (270) 926-8686
                                                        --------------


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 the number of shares  outstanding  of each of the  issuer's  classes of
common  stock,  as of the latest  practicable  date.  1,000 SHARES AS OF
                                                      -----
AUGUST 13, 2002
----------------------------

REGISTRANT  MEETS THE CONDITIONS SET FORTH IN GENERAL  INSTRUCTIONS  H(1)(A) AND
(B) OF FORM 10-Q AND IS THEREFORE  FILING THIS FORM WITH THE REDUCED  DISCLOSURE
FORMAT.



<PAGE>


                       TEXAS GAS TRANSMISSION CORPORATION

                                TABLE OF CONTENTS



                                                                          PAGE

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

          Balance Sheets - Assets .......................................  3

          Balance Sheets - Liabilities and Stockholder's Equity       ...  4

          Statements of Income...........................................  5

          Statements of Cash Flows  .....................................  6

          Condensed Notes to Financial Statements            ............  7

Item 2.   Management's Narrative Analysis of the Results of Operations... 13


                           PART II. OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K................................18

SIGNATURE...............................................................  19






Certain  matters  discussed in this report,  excluding  historical  information,
include forward-looking statements.  Although Texas Gas Transmission Corporation
believes such forward-looking statements are based on reasonable assumptions, no
assurance can be given that every  objective will be achieved.  Such  statements
are made in reliance on the "safe harbor" protections provided under the Private
Securities  Reform Act of 1995.  Additional  information about issues that could
lead to material  changes in performance is contained in Texas Gas  Transmission
Corporation's  2001 Annual Report on Form 10-K and 2002 First Quarter  Report on
Form 10-Q.


<PAGE>



                         PART I - FINANCIAL INFORMATION


ITEM 1.      FINANCIAL STATEMENTS

                       TEXAS GAS TRANSMISSION CORPORATION

                                 BALANCE SHEETS
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                     JUNE 30,             DECEMBER 31,
                       ASSETS                                          2002                     2001
                                                               --------------------      -------------------
<S>                                                            <C>                        <C>
Current Assets:
    Cash and cash equivalents                                  $           32             $            86
    Receivables:
       Accounts receivable - TGT Enterprises, Inc.                      1,069                       7,003
Other affiliates                                                        1,305                         278
       Other                                                            2,522                       1,470
    Gas Receivables:
       Transportation and exchange                                      1,238                       1,627
       Storage                                                            101                         -
    Advances to affiliates                                             49,686                      66,299
    Inventories                                                        14,194                      13,950
    Deferred income taxes                                              12,758                      20,492
    Costs recoverable from customers                                   22,282                      17,261
    Gas stored underground                                              3,486                       3,486
    Prepaid and other expenses                                          2,180                       1,551
                                                               --------------             ---------------
       Total current assets                                           110,853                     133,503
                                                               --------------             ---------------

Property, Plant and Equipment, at cost:
    Natural gas transmission plant                                  1,109,487                   1,096,620
    Other natural gas plant                                           173,014                     167,137
                                                               --------------             ---------------
                                                                    1,282,501                   1,263,757
    Less -- Accumulated depreciation and amortization                 212,689                     202,479
                                                               --------------             ---------------
       Property, plant and equipment, net                           1,069,812                   1,061,278
                                                               --------------             ---------------

Other Assets:
    Gas stored underground                                            121,605                     118,883
    Costs recoverable from customers                                   35,209                      37,641
    Prepaid pension                                                    32,834                      35,612
    Other                                                              10,646                       9,602
                                                               --------------             ---------------
       Total other assets                                             200,294                     201,738
                                                               --------------             ---------------

       Total Assets                                            $    1,380,959             $     1,396,519
                                                               ==============             ===============



The  accompanying  condensed notes are an integral part of these financial statements.

</TABLE>

<PAGE>



                       TEXAS GAS TRANSMISSION CORPORATION

                                 BALANCE SHEETS
                             (THOUSANDS OF DOLLARS,
                             EXCEPT FOR SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                        JUNE 30,           DECEMBER 31,
LIABILITIES AND STOCKHOLDER'S EQUITY                                      2002                   2001
                                                                 ---------------------    ------------------
<S>                                                            <C>                        <C>
Current Liabilities:
    Payables:
       Trade                                                   $        2,563             $         5,685
       Affiliates                                                       8,297                      32,822
       Other                                                            1,773                      10,139
    Gas Payables:
       Transportation and exchange                                     30,144                      15,437
       Storage                                                          8,320                      16,005
    Accrued income taxes due affiliate                                  7,427                      18,915
    Accrued taxes other                                                13,807                      11,708
    Accrued interest                                                    6,557                       6,557
    Accrued payroll and employee benefits                              30,545                      34,732
    Other accrued liabilities                                           7,776                       9,105
    Reserve for regulatory and rate matters                            36,909                      31,107
                                                               --------------             ---------------
       Total current liabilities                                      154,118                     192,212
                                                               --------------             ---------------

Long-Term Debt                                                        249,982                     250,174
                                                               --------------             ---------------

Other Liabilities and Deferred Credits:
    Deferred income taxes                                             180,899                     172,892
    Postretirement benefits other than pensions                        27,019                      30,101
    Pension plan costs                                                 32,835                      35,612
    Other                                                              33,338                      29,948
                                                               --------------             ---------------
       Total other liabilities and deferred credits                   274,091                     268,553
                                                               --------------             ---------------

Commitments and Contingencies

Stockholder's Equity:
    Common stock, $1.00 par value, 1,000 shares
       authorized, issued and outstanding                                   1                           1
    Premium on capital stock and other paid-in capital                630,608                     630,608
    Retained earnings                                                  72,159                      54,971
                                                               --------------             ---------------
       Total stockholder's equity                                     702,768                     685,580
                                                               --------------             ---------------

       Total Liabilities and Stockholder's Equity              $    1,380,959             $     1,396,519
                                                               ==============             ===============


The accompanying condensed notes are an integral part of these financial statements.

</TABLE>

<PAGE>


                       TEXAS GAS TRANSMISSION CORPORATION

                              STATEMENTS OF INCOME
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                            JUNE 30,                            JUNE 30,
                                                --------------------------------------------------------------------
                                                     2002                2001           2002            2001
                                                -------------       -------------  -------------   -------------
<S>                                              <C>            <C>                <C>             <C>
Operating Revenues:
    Gas transportation                           $    50,286    $    46,248        $   128,742     $   130,535
    Gas storage                                          493            595              1,268           1,172
    Other                                              1,048          1,356              2,022           2,703
                                                 -----------    -----------        -----------     -----------
      Total operating revenues                        51,827         48,199            132,032         134,410
                                                 -----------    -----------        -----------     -----------

Operating Costs and Expenses:
    Cost of gas transportation                         1,166          1,191              2,339           2,394
    Operation and maintenance                         11,766         11,055             20,962          23,566
    Administrative and general                        12,156         10,778             24,706          23,299
    Depreciation and amortization                     11,736         11,418             22,956          22,837
    Taxes other than income taxes                      3,738          2,984              8,299           7,397
                                                 -----------    -----------        -----------     -----------
      Total operating costs and expenses              40,562         37,426             79,262          79,493
                                                 -----------    -----------        -----------     -----------

Operating Income                                      11,265         10,773             52,770          54,917
                                                 -----------    -----------        -----------     -----------

Other (Income) Deductions:
    Interest expense                                   5,318          5,318             10,496          10,683
    Interest income from affiliates                     (277)          (948)              (547)         (2,217)
    Gain on sale of equipment                         -              -                  (1,323)         -
    Miscellaneous other (income)
      deductions, net                                   (325)           (71)            (1,036)            236
                                                 ------------   -----------        ------------    -----------
      Total other deductions                           4,716          4,299              7,590           8,702
                                                 -----------    -----------        -----------     -----------

Income Before Income Taxes                             6,549          6,474             45,180          46,215

Provision for Income Taxes                             2,613          2,646             17,992          18,415
                                                 -----------    -----------        -----------     -----------

Net Income                                       $     3,936    $     3,828        $    27,188     $    27,800
                                                 ===========    ===========        ===========     ===========





        The  accompanying  condensed notes are an integral part  of these financial statements.
</TABLE>


<PAGE>



                       TEXAS GAS TRANSMISSION CORPORATION
                            STATEMENTS OF CASH FLOWS
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                  SIX MONTHS ENDED JUNE 30,
                                                                                   2002                2001
                                                                              --------------     ---------------
<S>                                                                           <C>                  <C>
OPERATING ACTIVITIES:
    Net income                                                                $       27,188       $      27,800
    Adjustments to reconcile to cash provided from operations:
      Depreciation and amortization                                                   22,956              22,837
      Provision for deferred income taxes                                             15,741               7,787
      Gain on sale of equipment                                                       (1,323)               -
      Changes in operating assets and liabilities:
        Receivables                                                                     (764)              1,293
        Receivable - TGT Enterprises, Inc.                                             5,934                -
        Inventories                                                                     (244)                773
        Affiliates                                                                   (25,552)             (2,963)
        Other current assets                                                          (4,577)                129
        Accrued income taxes due affiliate                                           (11,488)            (19,606)
        Payables and accrued liabilities                                              (8,956)             (5,670)
        Reserve for regulatory and rate matters                                        5,802              14,677
        Other, including changes in noncurrent assets and liabilities                   (910)              7,781
                                                                              ---------------      -------------
           Net cash provided by operating activities                                  23,807              54,838
                                                                              ---------------      -------------

FINANCING ACTIVITIES:
           Dividends                                                                 (10,000)            (25,000)
                                                                              --------------       -------------
           Net cash used in financing activities                                     (10,000)            (25,000)
                                                                              --------------       -------------
INVESTING ACTIVITIES:
    Property, plant and equipment:
      Capital expenditures, net of allowance for funds used
         during construction                                                         (30,662)            (21,524)
      Proceeds from sales and salvage values,
         net of costs of removal                                                         188                (834)
    Advances to affiliates, net                                                       16,613              (7,650)
                                                                              --------------       -------------
           Net cash used in investing activities                                     (13,861)            (30,008)
                                                                              --------------       -------------

Decrease in cash and cash equivalents                                                    (54)               (170)
Cash and cash equivalents at beginning of period                                          86                 261
                                                                              --------------       -------------

Cash and cash equivalents at end of period                                    $           32       $          91
                                                                              ==============       =============



              The  accompanying  condensed notes are an integral part of these financial statements.

</TABLE>

<PAGE>


                       TEXAS GAS TRANSMISSION CORPORATION
                     CONDENSED NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


A.  CORPORATE STRUCTURE AND CONTROL AND BASIS OF PRESENTATION

    CORPORATE STRUCTURE AND CONTROL

       Texas  Gas  Transmission  Corporation  (Texas  Gas) is  wholly  owned  by
Williams Gas Pipeline Company,  LLC (WGP), which is a wholly owned subsidiary of
The Williams Companies, Inc. (Williams).

    BASIS OF PRESENTATION

       The financial statements have been prepared from the books and records of
Texas Gas without audit.  Certain information and footnote  disclosures normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the United  States  have been  condensed  or
omitted.   The  accompanying   unaudited   financial   statements   include  all
adjustments,  both normal  recurring and others,  which, in the opinion of Texas
Gas' management,  are necessary to present fairly its financial position at June
30, 2002,  and results of operations and cash flows for the three and six months
ended  June 30,  2002 and 2001.  These  financial  statements  should be read in
conjunction  with the  financial  statements,  notes  thereto  and  management's
narrative  analysis  contained in Texas Gas' 2001 Annual Report on Form 10-K and
Texas Gas' 2002 First Quarter Report on Form 10-Q.

       Certain reclassifications have been made in the 2001 financial statements
to conform to the 2002 presentation.

    SEASONAL VARIATION

       Operating  income may vary by quarter.  Based on current rate  structure,
Texas Gas experiences  higher  operating income in the first and fourth quarters
as compared to the second and third quarters.

B.  COMMITMENTS AND CONTINGENCIES

    REGULATORY AND RATE MATTERS AND RELATED LITIGATION

       FERC ORDER 637

       On February 9, 2000,  the Federal  Energy  Regulatory  Commission  (FERC)
issued a final rule,  Order 637, in which FERC adopted certain  policies that it
finds are necessary to adjust its current  regulatory  model to the needs of the
evolving markets,  but determined that any fundamental changes to its regulatory
policy will be considered  after  further  study and  evaluation of the evolving
marketplace.  Order 637  revises  the  FERC's  pricing  policy  to waive,  for a
two-year period, the maximum price ceilings for short-term  releases of capacity
<PAGE>
of less than one year,  and permits  pipelines  to file  proposals  to implement
seasonal rates for short-term services and term-differentiated rates, subject to
certain  requirements  including the  requirement  that a pipeline be limited to
recovering its annual revenue requirement under those rates. Texas Gas submitted
an Order 637  compliance  filing on August 15, 2000,  which  contained pro forma
tariff sheets designed to comply with certain  directives in the order regarding
the conduct of daily business  transactions.  A technical conference was held on
May 24, 2001, to initiate informal  discussions with all parties regarding Order
637 compliance  for Texas Gas. A contested  offer of settlement was filed on May
14, 2002 by Texas Gas.

       GENERAL RATE ISSUES

       On April  28,  2000,  Texas Gas filed a  general  rate case  (Docket  No.
RP00-260) which became effective November 1, 2000, subject to refund.  Texas Gas
proposed  in  this  rate  case  to  implement  value-based,  term-differentiated
seasonal rates for short-term  services effective November 1, 2000, as permitted
by FERC Order 637. On May 31,  2000,  the FERC issued its "Order  Accepting  and
Suspending Tariff Sheets Subject to Refund,  Rejecting Other Tariff Sheets,  and
Establishing Hearing and Settlement  Procedures" and established  administrative
procedures for the case. Although the case was set for hearing,  the hearing was
held in abeyance  pending the filing of  additional  information  related to the
value-based rate proposal for short-term firm transportation  service. Texas Gas
made that  supplemental  filing on June 30, 2000. On October 27, 2000,  the FERC
issued an order on that supplemental filing referring all issues in the case for
hearing. The participants engaged in informal settlement negotiations to attempt
to resolve all issues without a formal  hearing.  On August 14, 2001,  Texas Gas
submitted an offer of settlement  proposing to dispose of all issues outstanding
in  the  proceedings.  Only  one  group  of  participants  (Indicated  Shippers)
protested the settlement.  On September 26, 2001, the  Administrative  Law Judge
severed the Indicated  Shippers,  and  certified  the  settlement to the FERC as
uncontested  for the  remaining  parties.  On March 4, 2002,  the FERC issued an
order  approving the  settlement  and severing the  Indicated  Shippers from the
settlement  provisions.  On June 17, 2002,  the FERC issued an order denying the
Indicated  shipper's  request  for  rehearing  of the March 4, 2002  order.  The
settlement  became  effective  31 days after that order when no party  filed any
further requests for rehearing. Thus, the settlement's prospective rates will go
into  effect on August 1, 2002 and  refunds of  approximately  $38  million  are
anticipated  to be made in  mid-September.  Texas Gas has  provided  an adequate
reserve for amounts,  including  interest,  which may be refunded to  customers.
Adjustments  to  income  will be made  in the  third  quarter  2002,  which  are
anticipated  to  result  in  operating  profit of $15  million  to $17  million.
Additionally,  on July 15, 2002, Texas Gas filed an offer of settlement with the
Indicated  Shippers to resolve all  remaining  issues in the case. No additional
refunds will be due as a result of the settlement with the Indicated Shippers if
that offer of settlement is approved.

       UNIFORM STANDARDS OF CONDUCT FOR TRANSMISSION PROVIDERS

       On September  27, 2001,  the FERC issued a Notice of Proposed  Rulemaking
(NOPR)  proposing  to  adopt  uniform  standards  of  conduct  for  transmission
providers.  The proposed  rules  define  transmission  providers  as  interstate
natural gas pipelines and public utilities that own, operate or control electric
transmission  facilities.  The proposed  standards would regulate the conduct of
transmission providers with their energy affiliates. The FERC proposes to define
energy affiliates  broadly to include any transmission  provider  affiliate that
engages in or is involved in  transmission  (gas or electric)  transactions,  or
<PAGE>
manages or controls transmission capacity, or buys, sells, trades or administers
natural gas or electric energy or engages in financial  transactions relating to
the sale or transmission  of natural gas or electricity.  Current rules regulate
the  conduct of Texas Gas and its  natural gas  marketing  affiliates.  The FERC
invited  interested  parties to comment on the NOPR. On April 25, 2002, the FERC
issued  its staff  analysis  of the NOPR and the  comments  received.  The staff
analysis  proposes  redefining  the  definition of energy  affiliates to exclude
affiliated  transmission  providers.  On May 21,  2002,  the FERC  held a public
conference   concerning  the  NOPR  and  the  FERC  invited  the  submission  of
addtitional comments. If adopted, these new standards would require the adoption
of new compliance measures by Texas Gas.

       NEGOTIATED RATE POLICIES AND PRACTICES

       On July 17, 2002, the FERC issued a Notice of Inquiry to seek comments on
its  negotiated  rate  policies  and  practices.  The  FERC  states  that  it is
undertaking a review of the recourse rate as a viable  alternative and safeguard
against the exercise of market power of interstate gas pipelines, as well as the
entire spectrum of issues related to its negotiated  rate program.  The FERC has
requested that interested  parties respond to various  questions  related to the
FERC's negotiated rate policies and practices.  Texas Gas has negotiated certain
rates under the FERC's existing negotiated rate program.

       CASH MANAGEMENT PROGRAMS

       On August 1, 2002, the FERC issued a NOPR that proposes  restrictions  on
the type of cash management  program employed by Williams and its  subsidiaries,
including Texas Gas. In addition to stricter guidelines regarding the accounting
for and  documentation  of cash  management or cash pooling  programs,  the FERC
proposal, if made final, would preclude public utilities,  natural gas companies
and oil pipeline companies from participating in such programs unless the parent
company  and  its  FERC-regulated  affiliate  maintain  investment-grade  credit
ratings and that the FERC-regulated  affiliate maintains  stockholders equity of
at least 30 percent of total  capitalization.  Williams'  and Texas Gas' current
credit ratings are not investment  grade. The FERC is seeking public comments by
August 22, 2002.

       ROYALTY CLAIMS AND PRODUCER LITIGATION

       In connection  with Texas Gas'  renegotiations  of supply  contracts with
producers  to  resolve  take-or-pay  and other  contract  claims,  Texas Gas has
entered into certain  settlements which may require the indemnification by Texas
Gas of certain claims for royalties which a producer may be required to pay as a
result  of such  settlements.  Texas  Gas has  been  made  aware of  demands  on
producers  for  additional  royalties  and may receive  other demands that could
result in claims against Texas Gas pursuant to the indemnification  provision in
its  settlements.  Indemnification  for  royalties  will depend on,  among other
things,  the specific lease  provisions  between the producer and the lessor and
the terms of the  settlement  between the producer and Texas Gas.  Texas Gas may
file to  recover  75  percent  of any such  amounts  it may be  required  to pay
pursuant to  indemnifications  for royalties  under the provisions of FERC Order
528. Texas Gas has provided reserves for the estimated settlement costs of other
royalty claims and litigation.


<PAGE>

       ENVIRONMENTAL MATTERS

       As of June 30,  2002,  Texas  Gas had a  reserve  of  approximately  $1.3
million  for  estimated  costs  associated  with  environmental  assessment  and
remediation,  including  remediation  associated  with  the  historical  use  of
polychlorinated biphenyls and hydrocarbons.  This estimate depends upon a number
of  assumptions  concerning  the scope of  remediation  that will be required at
certain locations and the cost of remedial measures to be undertaken.  Texas Gas
is continuing to conduct environmental assessments and is implementing a variety
of remedial  measures  that may result in  increases  or  decreases in the total
estimated costs.

       Texas Gas currently is either named as a potentially responsible party or
has received an  information  request  regarding  its potential  involvement  at
certain  Superfund and state waste disposal sites.  The anticipated  remediation
costs,  if any,  associated  with these sites have been  included in the reserve
discussed above.

       Texas Gas is also subject to the federal  Clean Air Act (CAA) and the CAA
Amendments  of 1990  (Amendments)  which  added  significant  provisions  to the
existing federal CAA. The Amendments require the Environmental Protection Agency
(EPA) to promulgate new regulations pertaining to mobile sources,  hazardous air
pollutants, areas of ozone non-attainment, and acid rain. Texas Gas operates one
facility in an area designated as non-attainment  for the current ozone standard
(1 hour standard) and is aware that during 2002 the EPA may designate additional
areas as non-attainment based on implementation of the revised ozone standard (8
hour standard).  Additional areas designated as non-attainment under the revised
standard  may  potentially  impact  Texas  Gas'  operations.   Emission  control
modifications of compression  equipment located at facilities required to comply
with current federal CAA provisions,  the Amendments,  and State  Implementation
Plans for nitrogen oxide (NOx)  reductions are estimated to cost in the range of
$6 million to $14 million by 2005 and will be recorded as additions to property,
plant  and  equipment  as  the  facilities  are  added.  If the  EPA  designates
additional new non-attainment areas which impact Texas Gas' operations, the cost
of additions to property, plant and equipment is expected to increase;  however,
Texas  Gas is unable at this time to  estimate  with any  certainty  the cost of
additions that may be required.  Moreover,  regulations  pertaining to Hazardous
Air Pollutants  (HAPs) are anticipated to be promulgated  during 2002, which may
require emission controls in addition to the controls mentioned above. Texas Gas
cannot  predict the costs with any  certainty  at this time  resulting  from the
installation  of these  controls.  The  effective  compliance  date for the HAPs
regulations and installation of associated  controls is anticipated to be during
2005;  however, an extension of this date may result due to the delay associated
with promulgating these rules.

       Texas Gas considers  environmental  assessment,  remediation  costs,  and
costs associated with compliance with environmental  standards to be recoverable
through  rates,  as they are prudent  costs  incurred in the ordinary  course of
business.  The actual costs incurred will depend on the actual amount and extent
of contamination discovered,  the final cleanup standards mandated by the EPA or
other governmental authorities, and other factors.

       OTHER LEGAL ISSUES

       In 1998, the United States  Department of Justice informed  Williams that
Jack  Grynberg,  an individual,  had filed claims in the United States  District
<PAGE>
Court for the District of Colorado  under the False Claims Act against  Williams
and certain of its wholly owned  subsidiaries  including Texas Gas. Mr. Grynberg
has also filed  claims  against  approximately  300 other energy  companies  and
alleges that the defendants violated the False Claims Act in connection with the
measurement  and purchase of  hydrocarbons.  The relief sought is an unspecified
amount  of  royalties  allegedly  not  paid to the  federal  government,  treble
damages,  a civil penalty,  attorneys'  fees,  and costs.  On April 9, 1999, the
United States Department of Justice announced that it was declining to intervene
in any of the Grynberg  qui tam cases,  including  the action filed  against the
Williams  entities  in the United  States  District  Court for the  District  of
Colorado.   On  October  21,  1999,  the  Panel  on  Multi-District   Litigation
transferred  all of the Grynberg qui tam cases,  including  those filed  against
Williams,  to the United States  District  Court for the District of Wyoming for
pre-trial  purposes.  Motions  to  dismiss  the  complaints,  filed  by  various
defendants including Williams were denied by the court on May 18, 2001.

       On  May  2,  2000  a  flash  fire  occurred  at  Texas  Gas'  Greenville,
Mississippi compressor station injuring six contract employees and one Texas Gas
employee.  One contract employee died while in the hospital. A lawsuit was filed
against Texas Gas on behalf of the deceased  contract employee and several other
contract employees that were injured;  however,  damages were not specified.  On
October 4 and 5, 2001 a mediation  was held  involving  Texas Gas, its insurance
carriers (through its contractor Bluewater Construction Inc.  (Bluewater)),  and
Plaintiffs.  Settlement was reached with all named plaintiffs.  A final contract
employee alleging  injuries from the same accident has filed separately  against
Texas Gas.  This  plaintiff  was included in the original  litigation,  and then
withdrew. Informal settlement negotiations are continuing with this plaintiff.

       On June 8, 2001, 14 Williams entities, including Texas Gas, were named as
defendants in a nationwide  class action lawsuit which has been pending  against
other defendants,  generally pipeline and gathering companies, for more than one
year.  The  plaintiffs  allege  that  the  defendants,  including  the  Williams
defendants,  have engaged in mismeasurement  techniques that distort the heating
content of natural gas, resulting in an alleged underpayment of royalties to the
class of producer  plaintiffs.  In September  2001, the  plaintiffs  voluntarily
dismissed two of the 14 Williams entities named as defendants in the lawsuit. In
November  2001,  Williams,  along with other  Coordinating  Defendants,  filed a
motion to dismiss under Rules 9b and 12b of the Kansas Rules of Civil Procedure.
In  January  2002,  most of the  Williams  defendants,  along  with a  group  of
Coordinating  Defendants,  filed a  motion  to  dismiss  for  lack  of  personal
jurisdiction.  The court has not yet ruled on these motions. In the next several
months,  the Williams  entities  will join with other  defendants  in contesting
certification of the plaintiff class.

       SUMMARY OF COMMITMENTS AND CONTINGENCIES

       While no  assurances  may be given,  Texas Gas does not believe  that the
ultimate  resolution of the foregoing matters taken as a whole,  based on advice
from counsel and after  consideration  of amounts accrued,  insurance  coverage,
potential recovery from customers or other  indemnification  arrangements,  will
have a  materially  adverse  effect on Texas  Gas'  future  financial  position,
results of operations or cash flow requirements.


<PAGE>


C.  ADOPTION OF ACCOUNTING STANDARDS

       In June 2001,  the  Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible  Assets." SFAS No. 142 addresses  accounting and reporting  standards
for  goodwill  and  other  intangible  assets.  Under  the  provisions  of  this
statement,  goodwill and intangible  assets with indefinite  useful lives are no
longer amortized, but will be tested annually for impairment.  Texas Gas applied
the new rules beginning January 1, 2002. Because Texas Gas has no goodwill,  and
intangible assets are amortized at rates approved by the FERC through regulatory
proceedings, there was no impairment upon adoption.

       In second-quarter 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements  No. 4, 44 and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections."  The  rescission of SFAS No. 4,  "Reporting  Gains and Losses from
Extinguishment  of  Debt,"  and SFAS No.  64,  "Extinguishments  of Debt Made to
Satisfy  Sinking-Fund   Requirements,"  requires  that  gains  and  losses  from
extinguishment  of debt only be classified as  extraordinary  items in the event
that they meet the criteria of Accounting  Principles Board Opinion No. 30. SFAS
No.  44,  "Accounting  for  Intangible  Assets of Motor  Carriers,"  established
accounting  requirements for the effects of transition to the Motor Carriers Act
of 1980 and is no longer required now that the transitions  have been completed.
Finally,  the amendments to SFAS No. 13 require certain lease modifications that
have  economic  effects  which are  similar to  sale-leaseback  transactions  be
accounted for as  sale-leaseback  transactions.  The  provisions of SFAS No. 145
related  to the  rescission  of SFAS No. 4 are to be  applied  in  fiscal  years
beginning  after May 15, 2002,  while the provisions  related to SFAS No. 13 are
effective for transactions occurring after May 15, 2002. All other provisions of
the Statement are effective for financial  statements issued on or after May 15,
2002.  There was no  initial  impact of SFAS No.  145 on Texas  Gas'  results of
continued  operations and financial position.  Future gains and losses from debt
extinguishments  will  continue  to be  accounted  for in  accordance  with FERC
regulations.

       Also in  second-quarter  2002, the FASB issued SFAS No. 146,  "Accounting
for Costs Associated with Exit or Disposal Activities." This Statement addresses
financial  accounting and reporting for costs  associated  with exit or disposal
activities and nullifies  Emerging Issues Task Force Issue No. 94-3,  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."  This Statement
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity  be  recognized  and  measured  initially  at fair  value only when the
liability is incurred. The provisions of the Statement are effective for exit or
disposal  activities  that are initiated  after December 31, 2002. The effect of
this  standard on Texas Gas' results of  operations  and  financial  position is
being evaluated.











<PAGE>


ITEM 2.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
                  (FILED PURSUANT TO GENERAL INSTRUCTION H)


                                  RECENT EVENTS

       As a result  of credit  issues  facing  Williams  and the  assumption  of
payment  obligations  and  performance  on guarantees  associated  with Williams
Communications  Group,  Inc.  (WCG),  a former  affiliate of Williams,  Williams
announced plans during the first quarter of 2002 to strengthen its balance sheet
and  support  retention  of its  investment  grade  ratings.  The plan  included
reducing capital expenditures during the balance of 2002, future sales of assets
to generate  proceeds to be used to reduce  outstanding debt and the lowering of
expenses,  in part through an  enhanced-benefit  early retirement  program which
concluded during the second quarter.

       During the second quarter,  Williams  experienced  liquidity issues,  the
effect of which limited Williams Energy Marketing & Trading's (WEM&T) ability to
manage  market  risk  and  exercise  hedging   strategies  as  market  liquidity
deteriorated.  During May 2002,  major  rating  agencies  lowered  their  credit
ratings on Williams' unsecured  long-term debt; however,  the ratings still were
maintained as investment grade for the balance of the quarter.

       Subsequent to the end of the second quarter,  Williams  announced that it
would have a  substantial  net loss for the quarter.  In addition,  the Williams
board of  directors  reduced the Williams  common  stock  dividend for the third
quarter  from the prior  level of 20 cents per  share to 1 cent per  share.  The
major rating agencies  downgraded  Williams'  credit ratings to below investment
grade  reflecting  the  uncertainty  associated  with  Williams'  energy trading
business,  short-term cash requirements  facing Williams and the increased level
of  debt  Williams  had  incurred  to  meet  the  WCG  payment  obligations  and
guarantees.  Concurrent  with these  events,  Williams  was unable to complete a
renewal of its  unsecured  short-term  bank  facility  which expired on July 24,
2002.  Subsequently,  Williams did obtain two secured  facilities  totaling $1.3
billion and amended its  existing  $700  million  credit  agreement to a secured
basis. These borrowing  facilities include pledges of certain assets and contain
financial ratios and other covenants that must be maintained. If such provisions
of the agreements are not  maintained,  then amounts  outstanding can become due
immediately  and  payable.  Williams  believes  that  these  financings  and the
proceeds received from recent asset sales have significantly  improved Williams'
liquidity  for the balance of the year.  In  addition,  Williams is pursuing the
sale of other assets to enhance  liquidity.  The sales are  anticipated to close
during the second half of 2002.

       The  energy  trading  sector  has  experienced  deteriorating  conditions
because of credit and regulatory concerns,  and these have significantly reduced
WEM&T's ability to attract new business. In late July 2002, Williams' management
decided to continue to reduce  Williams'  commitment  and exposure to its energy
marketing and risk  management  business.  This  reduction  could be realized by
entering  into a joint  venture  arrangement  with a third  party or a sale of a
portion or all of the marketing and trading portfolio. WEM&T, as well as several
unaffiliated energy trading companies, are Texas Gas customers. Texas Gas cannot
predict  at  this  time to what  extent  its  business  may be  impacted  by the
deteriorating  conditions in the energy trading sector, however,  generally such
companies have continued to perform their contractual commitments to Texas Gas.

<PAGE>

                        FINANCIAL ANALYSIS OF OPERATIONS
                   SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO
                         SIX MONTHS ENDED JUNE 30, 2001

       Operating income was $2.1 million lower for the six months ended June 30,
2002,  than for the six months  ended June 30,  2001.  The decrease in operating
income was due primarily to lower operating revenues,  partially offset by lower
operation and maintenance costs.

       Operating revenues decreased $2.3 million primarily attributable to lower
transportation  revenues  resulting  from lower volumes due to a warmer  winter.
Total  deliveries  were 348.3 Tbtu and 348.9 Tbtu for the six months of 2002 and
2001,  respectively.  The  decrease in  throughput  was  partially  offset by an
increase in transportation volumes to processing plants. In 2001, transportation
volumes to processing plants decreased  dramatically due to the spike in natural
gas prices.  Generally,  transportation  of this gas is for a  relatively  short
distance; therefore, the revenue associated with this transportation is minimal.

       Operating   costs  and  expenses   decreased   $0.2   million   primarily
attributable to lower operation and maintenance  costs of $2.6 million partially
offset by $1.4  million of  increased  general  and  administrative  costs.  The
decrease in operation  and  maintenance  costs was due primarily to an insurance
settlement  received in 2002 and the timing of the occurrence of these expenses.
The increase in general and administrative  costs was due primarily to increased
benefit costs.

       Net income decreased $0.6 million  primarily due to the reasons discussed
above and a $1.7  million  decrease in interest  income from  affiliates  due to
lower  advances to WGP and lower  interest  rates on these  advances,  partially
offset by a $1.3 million gain on the sale of certain equipment.

                        FINANCIAL CONDITION AND LIQUIDITY

       METHOD OF FINANCING

       Texas Gas funds its capital  requirements  with cash flows from operating
activities by accessing capital markets, by repayments of funds advanced to WGP,
by  borrowings  under a credit  agreement  (discussed  below) and, if  required,
advances from WGP. Historically,  Texas Gas also funded its capital requirements
through  a sale  of  receivables  program.  In July  2002,  Texas  Gas'  sale of
receivables program expired and was not renewed.

       Texas  Gas has an  effective  registration  statement  on file  with  the
Securities  and Exchange  Commission.  At June 30,  2002,  $100 million of shelf
availability  remains  under this  registration  statement  which may be used to
issue debt securities.  Interest rates and market conditions will affect amounts
borrowed,  if any,  under this  arrangement.  With the  downgrade  in Texas Gas'
credit ratings  (discussed  below),  interest rates on future financings will be
higher,  but  Texas Gas  believes  any  additional  financing  arrangements,  if
required,   can  be  obtained  from  the  capital  markets  on  terms  that  are
commensurate with its current credit ratings.
<PAGE>

       Williams  and  certain of its  subsidiaries,  including  Texas  Gas,  are
parties to a $700 million credit agreement,  under which Texas Gas can borrow up
to $200 million if the funds available under the credit  agreement have not been
borrowed by Williams or other subsidiaries. The credit agreement expires in July
2005.  Interest rates vary with current market conditions based on the base rate
of Citibank  N.A.,  three-month  certificates  of deposit of major United States
money market banks, federal funds rate or the London Interbank Offered Rate. The
credit agreement contains restrictions which limit, under certain circumstances,
the issuance of additional  debt,  the attachment of liens on any assets and any
change of ownership of Texas Gas. As Williams completes certain asset sales, the
$700 million  commitment from  participating  banks in the credit agreement will
ultimately  be  reduced to $400  million,  but Texas Gas will  continue  to have
borrowing  capacity up to $200 million if the funds  available  under the credit
agreement have not been borrowed by Williams or other subsidiaries.  At June 30,
2002, $200 million of borrowing capacity was available to Texas Gas. At June 30,
2002, Texas Gas had no outstanding borrowings under this agreement.

       As a participant  in Williams'  cash  management  program,  Texas Gas has
advances  to and/or  from  Williams  through  Texas Gas'  parent  company,  WGP.
Advances are  represented  by demand notes.  The interest  rate on  intercompany
demand notes is the London Interbank  Offered Rate on the first day of the month
plus an  applicable  margin based on the current  Standard and Poor's  Rating of
Texas Gas. At June 30, 2002,  the  advances  due Texas Gas by WGP totaled  $49.7
million.  Because of recent asset sales,  anticipated  asset sales in the future
and recently  negotiated  secured borrowing  facilities,  Williams has indicated
that it currently believes that it continues to have the financial resources and
liquidity to repay advances to Texas Gas.

       On August 1, 2002, the FERC issued a NOPR that proposes  restrictions  on
the type of cash management  program employed by Williams and its  subsidiaries,
including Texas Gas. In addition to stricter guidelines regarding the accounting
for and  documentation  of cash  management or cash pooling  programs,  the FERC
proposal, if made final, would preclude public utilities,  natural gas companies
and oil pipeline companies from participating in such programs unless the parent
company  and  its  FERC-regulated  affiliate  maintain  investment-grade  credit
ratings and that the FERC-regulated  affiliate maintains  stockholders equity of
at least 30 percent of total  capitalization.  Williams'  and Texas Gas' current
credit ratings are not investment  grade. The FERC is seeking public comments by
August 22, 2002.

       Texas Gas,  through a wholly owned  bankruptcy  remote  subsidiary,  sold
certain  trade  accounts  receivable  to a  special  purpose  entity  (SPE) in a
securitization  structure  requiring  annual  renewal.  Texas  Gas  acted as the
servicing agent for sold receivables and received a servicing fee  approximating
the fair value of such services.  The sale of receivables program was terminated
on July  25,  2002  and,  by the end of  August,  Texas  Gas will  complete  the
repurchase of approximately $10 million of trade accounts receivable  previously
sold.

       CREDIT RATINGS

       Texas Gas has no  guarantees of  off-balance  sheet debt to third parties
and maintains no debt obligations that contain provisions requiring  accelerated
payment of the related  obligations in the event of specified levels of declines
in Williams' or Texas Gas' credit ratings given by Moody's  Investor's  Service,
Standard & Poor's and Fitch Ratings (rating agencies).
<PAGE>

       In the second  quarter and July 2002, the rating  agencies  reduced Texas
Gas' credit ratings on its senior unsecured long-term debt, as follows:

   Moody's Investor's Services.......................................Baa1 to Ba2
   Standard & Poor's.................................................BBB+ to B+
   Fitch Ratings.....................................................BBB+ to BB-

       The rating  agencies  have  reduced  Texas  Gas'  credit  ratings  due to
concerns about the  sufficiency of Williams'  operating cash flow in relation to
its debt as well as the  adequacy of  Williams'  liquidity.  The ratings  remain
under review  pending the execution of Williams' plan to stabilize its financial
position.

       CAPITAL EXPENDITURES

       As  discussed  above,  Williams has  announced  plans to  strengthen  its
balance  sheet,  which includes  reductions in Williams' 2002 estimated  capital
spending  program.  As a  Williams  subsidiary,  Texas Gas will  participate  in
Williams'  plan to reduce  capital  spending,  primarily  by  managing  its 2002
capital spending  program at a lower level than  anticipated  prior to Williams'
announcement.

       Texas Gas' capital expenditures for the first six months of 2002 and 2001
were $30.7 million and $21.5 million,  respectively.  Capital  expenditures  for
2002 are expected to approximate $54.2 million.

       Texas Gas' debt as a percentage of total  capitalization at June 30, 2002
and December 31, 2001 was 26.2% and 26.7%, respectively.

       Although no assurances  can be given,  Texas Gas currently  believes that
the  aggregate  of cash  flows from  operating  activities,  supplemented,  when
necessary,  by  repayments  of  funds  advanced  to  WGP,  advances  or  capital
contributions  from  Williams and  borrowings  under the credit  agreement  will
provide Texas Gas with  sufficient  liquidity to meet its capital  requirements.
When  necessary,  Texas Gas also expects to access public and private markets on
terms  commensurate  with its  current  credit  ratings to finance  its  capital
requirements.

       GENERAL RATE ISSUES

       On April  28,  2000,  Texas Gas filed a  general  rate case  (Docket  No.
RP00-260) which became effective November 1, 2000, subject to refund.  Texas Gas
proposed  in  this  rate  case  to  implement  value-based,  term-differentiated
seasonal rates for short-term  services effective November 1, 2000, as permitted
by FERC Order 637. On May 31,  2000,  the FERC issued its "Order  Accepting  and
Suspending Tariff Sheets Subject to Refund,  Rejecting Other Tariff Sheets,  and
Establishing Hearing and Settlement  Procedures" and established  administrative
procedures for the case. Although the case was set for hearing,  the hearing was
held in abeyance  pending the filing of  additional  information  related to the
value-based rate proposal for short-term firm transportation  service. Texas Gas
made that  supplemental  filing on June 30, 2000. On October 27, 2000,  the FERC
issued an order on that supplemental filing referring all issues in the case for
hearing. The participants engaged in informal settlement negotiations to attempt
to resolve all issues without a formal  hearing.  On August 14, 2001,  Texas Gas
<PAGE>
submitted an offer of settlement  proposing to dispose of all issues outstanding
in  the  proceedings.  Only  one  group  of  participants  (Indicated  Shippers)
protested the settlement.  On September 26, 2001, the  Administrative  Law Judge
severed the Indicated  Shippers,  and  certified  the  settlement to the FERC as
uncontested  for the  remaining  parties.  On March 4, 2002,  the FERC issued an
order  approving the  settlement  and severing the  Indicated  Shippers from the
settlement  provisions.  On June 17, 2002,  the FERC issued an order denying the
Indicated  shipper's  request  for  rehearing  of the March 4, 2002  order.  The
settlement  became  effective  31 days after that order when no party  filed any
further requests for rehearing. Thus, the settlement's prospective rates will go
into  effect on August 1, 2002 and  refunds of  approximately  $38  million  are
anticipated  to be made in  mid-September.  Texas Gas has  provided  an adequate
reserve for amounts,  including  interest,  which may be refunded to  customers.
Adjustments  to  income  will be made  in the  third  quarter  2002,  which  are
anticipated  to  result  in  operating  profit of $15  million  to $17  million.
Additionally,  on July 15, 2002, Texas Gas filed an offer of settlement with the
Indicated  Shippers to resolve all  remaining  issues in the case. No additional
refunds will be due as a result of the settlement with the Indicated Shippers if
that offer of settlement is approved.




<PAGE>



                           PART II - OTHER INFORMATION



ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

                (a)   Exhibits

                      The following instruments are included as exhibits to this
                      report.  Those  exhibits below  incorporated  by reference
                      herein are indicated as such by the  information  supplied
                      in  the  parenthetical  thereafter.  If  no  parenthetical
                      appears after an exhibit,  copies of the  instrument  have
                      been included herewith.

                 (10) Material  contracts

                    - 1 Consent and Fourth  Amendment to Credit  Agreement dated
                    as of July 31,  2002,  to Credit  Agreement  dated  July 25,
                    2000, among The Williams Companies,  Inc. and certain of its
                    subsidiaries,  including Texas Gas, the banks named therein,
                    the   Co-Syndication    Agents   as   named   therein,   the
                    Documentation Agent as named therein and Citibank,  N.A., as
                    agent  (Exhibit 10.12 to The Williams  Companies,  Inc. Form
                    10-Q for the quarterly period ended June 30, 2002 Commission
                    File   Number   1-4174)   (99)   Additional   Exhibits  -  1
                    Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 by
                    J. Douglas  Whisenant,  Chief Executive Officer of Texas Gas
                    Transmission Corporation

                    - 2  Certification  pursuant to 18 U.S.C.  Section  1350, as
                    adopted pursuant to Section 906 of The Sarbanes-Oxley Act of
                    2002 by Richard  Rodekohr,  Chief Financial Officer of Texas
                    Gas Transmission Corporation


                (b)   Reports on Form 8-K

                      None





<PAGE>













                                S I G N A T U R E


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.

                                            TEXAS GAS TRANSMISSION CORPORATION



DATE:   AUGUST 13, 2002                BY:      /S/ S. W. HARRIS
     ----------------------------         ------------------------------------
                                                   S. W. Harris
                                        Controller and Chief Accounting Officer