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 SEPTEMBER 30, 2001

                                       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 NOVEMBER 12, 2001
                                            ------------------------------------

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 ..... 12


                           PART II. OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K.................................  14

SIGNATURE..................................................................  15






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  2000 Annual Report on Form 10-K and 2001 First and Second Quarter
Reports on Form 10-Q.


<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

                       TEXAS GAS TRANSMISSION CORPORATION

                                 BALANCE SHEETS
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

                                               SEPTEMBER 30,      DECEMBER 31,
                       ASSETS                        2001               2000
                                             ----------------      -------------
Current Assets:
    Cash and cash equivalents                $        -        $           261
    Receivables:
       Affiliates                                     1,241             11,824
       Other                                          3,221              1,539
    Gas Receivables:
       Transportation and exchange                      239              1,543
       Storage                                        4,154              4,165
    Advances to affiliates                           69,165             64,763
    Inventories                                      13,882             15,125
    Deferred income taxes                            17,868             14,544
    Costs recoverable from customers                 17,635             15,894
    Gas stored underground                            3,486              3,486
    Prepaid and other expenses                        2,112              1,554
                                             --------------    ---------------
       Total current assets                         133,003            134,698
                                             --------------    ---------------

Property, Plant and Equipment, at cost:
    Natural gas transmission plant                1,041,182          1,011,447
    Other natural gas plant                         161,068            152,919
                                             --------------    ---------------
                                                  1,202,250          1,164,366
    Less -- Accumulated depreciation and
      amortization                                  193,246            166,857
                                             --------------    ---------------
       Property, plant and equipment, net         1,009,004            997,509
                                             --------------    ---------------

Other Assets:
    Gas stored underground                          105,841             91,307
    Costs recoverable from customers                 39,123             46,264
    Prepaid pension                                  34,576             31,469
    Other                                            10,880             10,243
                                             --------------    ---------------
       Total other assets                           190,420            179,283
                                             --------------    ---------------

       Total Assets                          $    1,332,427    $     1,311,490
                                             ==============    ===============




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


<PAGE>


                       TEXAS GAS TRANSMISSION CORPORATION

                                 BALANCE SHEETS
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                   SEPTEMBER 30,           DECEMBER 31,
LIABILITIES AND STOCKHOLDER'S EQUITY                                     2001                    2000
                                                                  -------------------     ------------------
<S>                                                            <C>                        <C>
Current Liabilities:
    Payables:
       Trade                                                   $        2,699             $         1,043
       Affiliates                                                       8,747                      10,311
       Other                                                           12,080                       7,213
    Gas Payables:
       Transportation and exchange                                     11,297                       5,011
       Storage                                                         10,847                       9,542
    Accrued income taxes due affiliate                                  9,615                      23,841
    Accrued taxes other                                                19,133                      15,889
    Accrued interest                                                    1,510                       6,557

    Accrued payroll and employee benefits                              34,331                      37,117
    Other accrued liabilities                                          11,046                       9,253
    Reserve for regulatory and rate matters                            27,625                      10,473
                                                               --------------             ----------------------------------
       Total current liabilities                                      148,930                     136,250
                                                               --------------             ---------------

Long-Term Debt                                                        250,267                     250,533
                                                               --------------             ---------------

Other Liabilities and Deferred Credits:
    Deferred income taxes                                             171,687                     165,842
    Postretirement benefits other than pensions                        31,724                      35,764
    Pension plan costs                                                 34,576                      31,469
    Other                                                              28,822                      26,183
                                                               --------------             ---------------
       Total other liabilities and deferred credits                   266,809                     259,258
                                                               --------------             ---------------

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                                                  35,812                      34,840
                                                               --------------             ---------------
       Total stockholder's equity                                     666,421                     665,449
                                                               --------------             ---------------

       Total Liabilities and Stockholder's Equity              $    1,332,427             $     1,311,490
                                                               ==============             ===============


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                    NINE MONTHS ENDED
                                                        SEPTEMBER 30,                        SEPTEMBER 30,
                                                ------------------------------     ------------------------------
                                                     2001                2000           2001            2000
                                                -------------       -------------  -------------   -------------

<S>                                              <C>            <C>                <C>             <C>
Operating Revenues:
    Gas transportation                           $    41,086    $    44,580        $   171,621     $   177,576
    Gas storage                                          590            595              1,762           1,876
    Other                                              1,077          1,128              3,780           3,860
                                                 -----------    -----------        -----------     -----------
      Total operating revenues                        42,753         46,303            177,163         183,312
                                                 -----------    -----------        -----------     -----------

Operating Costs and Expenses:
    Cost of gas transportation                         1,011          1,633              3,405           3,639
    Operation and maintenance                         11,788         12,390             35,354          35,973
    General and administrative                        12,901         11,832             36,200          37,941
    Depreciation and amortization                     11,505         11,123             34,342          33,644
    Taxes other than income taxes                      3,593          3,336             10,990          10,981
                                                 -----------    -----------        -----------     -----------
      Total operating costs and expenses              40,798         40,314            120,291         122,178
                                                 -----------    -----------        -----------     -----------

Operating Income                                       1,955          5,989             56,872          61,134
                                                 -----------    -----------        -----------     -----------

Other (Income) Deductions:
    Interest expense                                   5,476          4,816             16,159          14,736
    Interest income from affiliates                     (786)        (1,272)            (3,003)         (4,384)
    Miscellaneous other (income)
      deductions, net                                   (303)          (412)               (67)           (403)
                                                 -----------    -----------        -----------     -----------
      Total other deductions                           4,387          3,132             13,089           9,949
                                                 -----------    -----------        -----------     -----------

Income Before Income Taxes                            (2,432)         2,857             43,783          51,185

Provision for Income Taxes                              (604)           927             17,811          19,746
                                                 -----------    -----------        -----------     -----------

Net Income                                       $    (1,828)   $    1,930     $        25,972    $     31,439
                                                 ===========    ==========     ===============    ============


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>
                                                                         NINE MONTHS ENDED SEPTEMBER 30,
                                                                            2001                     2000
                                                                       -------------            ------------
<S>                                                                  <C>                       <C>
OPERATING ACTIVITIES:
    Net income                                                       $    25,972               $    31,439
    Adjustments to reconcile to cash provided
     from operations:
       Depreciation and amortization                                      34,342                    33,644
       Provision for deferred income taxes                                 2,521                    (3,481)
Changes in operating assets and liabilities:
         Receivables                                                       8,072                    (6,729)
         Inventories                                                       1,243                       (46)
  Other current assets                                                    (5,250)                    7,375
  Accrued income taxes due affiliate                                     (14,226)                   10,102
  Payables and accrued liabilities                                        11,622                   (30,959)
  Reserve for regulatory and rate matters                                 17,152                        36
         Other, including changes in noncurrent assets
          and liabilities                                                 (9,881)                   27,049
                                                                     -----------               -----------
Net cash provided by operating activities                                 71,567                    68,430
                                                                     -----------               -----------

FINANCING ACTIVITIES:
        Dividends                                                        (25,000)                  (46,000)
                                                                     -----------               -----------
           Net cash used in financing activities                         (25,000)                  (46,000)
                                                                     -----------               -----------

INVESTING ACTIVITIES:
    Property, plant and equipment:
       Capital expenditures, net of allowance for
          funds used during construction                                 (44,083)                  (46,566)
       Costs of removal, net of proceeds from
          sales and salvage values                                          (462)                   (1,594)
    Proceeds from sale of long-term investments                             -                          172
    Advances to affiliates, net                                           (2,283)                   25,524
                                                                     -----------               -----------
           Net cash used in investing activities                         (46,828)                  (22,464)
                                                                     -----------               -----------

Decrease in cash and cash equivalents                                       (261)                      (34)
Cash and cash equivalents at beginning of period                             261                       266
                                                                     -----------               -----------

Cash and cash equivalents at end of period                           $     -                   $       232
                                                                     ===========               ===========


               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
September  30,  2001,  and results of  operations  for the three and nine months
ended  September  30, 2001 and 2000,  and cash flows for the nine  months  ended
September  30,  2001 and  2000.  These  financial  statements  should be read in
conjunction  with the  financial  statements,  notes  thereto  and  management's
narrative  analysis  contained in Texas Gas' 2000 Annual Report on Form 10-K and
Texas Gas' 2001 First and Second Quarter Reports on Form 10-Q.

       Certain reclassifications have been made in the 2000 financial statements
to conform to the 2001 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 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.  Most significantly,  in Order
637, the FERC (i) revised its pricing  policy to waive,  for a two-year  period,
the maximum price ceilings for short-term  releases of capacity of less than one
year, and (ii) 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.  Subsequent  to the  conference,  Texas Gas  provided
additional  information and has submitted a draft revised compliance plan to all
parties for discussion.

      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.  This rate
case reflects a requested annual revenue increase of approximately  $81 million,
based on filed rates,  primarily  attributable  to increases in the utility rate
base, depreciation expense, rate of return and related taxes, and revised system
rate design  quantities.  Texas Gas also proposes 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
Commission  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 Commission  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,  the Indicated  Shippers,  protested the settlement.  On
September 21, 2001, the Administrative Law Judge severed the Indicated Shippers,
and certified the settlement to the Commission as uncontested  for the remaining
parties.   The  parties   are   awaiting   Commission   action  on  the  Judge's
certification. Texas Gas has provided an adequate reserve for amounts, including
interest, which may be refunded to customers.

      UNIFORM STANDARDS OF CONDUCT FOR TRANSMISSION PROVIDERS

      On  September  27, 2001,  the FERC issued a Notice of Proposed  Rulemaking
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 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. If adopted, these
new  standards  would require the adoption of new  compliance  measures by Texas
Gas.


      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 has
provided reserves for the estimated settlement costs of other royalty claims and
litigation.

      ENVIRONMENTAL MATTERS

      As of September 30, 2001,  Texas Gas had a reserve of  approximately  $1.4
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,  air toxics,
areas of ozone  non-attainment,  and acid rain. Texas Gas operates facilities in
some areas  designated as  non-attainment  for the current ozone standard and is
aware that the EPA may  designate  additional  non-attainment  areas during 2001
which  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 May 2004 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 in 2001 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,  draft regulations pertaining
to Hazardous Air Pollutants  (HAPs) are anticipated to be published  during late
2001 or early  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 2003;  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
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
had also filed  claims  against  approximately  300 other energy  companies  and
alleged that the defendants violated the False Claims Act in connection with the
measurement and purchase of  hydrocarbons.  The relief sought was 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 the ones filed against
Williams,  to the United States  District  Court for the District of Wyoming for
pre-trial  purposes.  Motions to dismiss  the  complaints  were filed by various
defendants  including  Williams.  In May 2001,  the  Court  denied  the  pending
motions.

      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  plaintiffs  except one. The trial
involving  that  plaintiff  was  scheduled  for  November 5, 2001,  but has been
postponed to allow further discovery and mediation, until an as yet undetermined
date.

      On June 8, 2001,  fourteen  Williams  entities,  including Texas Gas, were
named as defendants in a nationwide  class action lawsuit which has been pending
against other defendants,  generally pipelines 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, plaintiffs' counsel voluntarily
dismissed, without prejudice, defendants Williams Pipe Line Company and Williams
Interstate  Natural  Gas Co. The  remaining  Williams  entities  will join other
defendants in filing at least one more dispositive motion, along with contesting
class certification in the next several months.





      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.

C.  ADOPTION OF ACCOUNTING STANDARDS

      In June 1998,  the  Financial  Accounting  Standards  Board (FASB)  issued
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative  Instruments and Hedging  Activities." This was followed in June 2000
by the issuance of SFAS No. 138, "Accounting for Certain Derivative  Instruments
and Certain Hedging Activities," which amends SFAS No. 133. SFAS No. 133 and No.
138 establish  accounting  and  reporting  standards  for  derivative  financial
instruments.  The standards require that all derivative financial instruments be
recorded on the balance  sheet at their fair values.  Changes in the fair values
of derivatives will be recorded each period in earnings if the derivative is not
a hedge. If a derivative is a hedge, changes in the fair value of the derivative
will either be recognized in earnings along with the change in the fair value of
the hedged asset,  liability or firm  commitment  also recognized in earnings or
recognized in other comprehensive  income until the hedged item is recognized in
earnings.  For a  derivative  recognized  in  other  comprehensive  income,  the
ineffective  portion of the derivative's change in fair value will be recognized
immediately in earnings.  Texas Gas adopted these standards effective January 1,
2001 with no financial impact to results of operations or financial position.

      In June,  2001,  the FASB  issued  SFAS No.  143,  "Accounting  for  Asset
Retirement  Obligations."  This  Statement  addresses  financial  accounting and
reporting for obligations  associated with the retirement of tangible long-lived
assets and the associated  asset  retirement costs and amends FASB Statement No.
19, "Financial Accounting and Reporting by Oil and Gas Producing Companies." The
Statement  requires that the fair value of a liability  for an asset  retirement
obligation  be  recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made,  and that the  associated  asset  retirement
costs be capitalized as part of the carrying amount of the long-lived asset. The
Statement  is  effective  for  financial  statements  issued  for  fiscal  years
beginning after June 15, 2002. The effect of this standard on Texas Gas' results
of operations and financial position is being evaluated.

      In  August  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived Assets." This Statement supersedes SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed of" and amends APB Opinion No. 30,  "Reporting the Results
of Operations - Reporting the Effects of Disposal of a Segment of a Business and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions." The
Statement  retains  the  basic  framework  of SFAS  No.  121,  resolves  certain
implementation  issues of SFAS No. 121,  extends  applicability  to discontinued
operations,  and broadens the presentation of discontinued operations to include
a component of an entity.  The Statement is to be applied  prospectively  and is
effective  for  financial  statements  issued for fiscal years  beginning  after
December 15, 2001.  This Statement is not expected to have any initial impact on
Texas Gas' results of operations or financial position.


<PAGE>


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


                        FINANCIAL ANALYSIS OF OPERATIONS
                NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO
                      NINE MONTHS ENDED SEPTEMBER 30, 2000

      Operating  income  was  $4.3  million  lower  for the  nine  months  ended
September  30, 2001,  than for the nine months  ended  September  30, 2000.  The
decrease  in  operating  profit  was due  primarily  to $6.1  million  in  lower
revenues,  partially offset by $1.7 million in lower general and  administrative
costs.  Interest  expense  increased  $1.4 million due  primarily to interest on
refund  reserves  related to Texas Gas'  current  rate case  (Docket  RP00-260).
Interest  income from  affiliates  decreased $1.4 million due primarily to lower
rates on an interest bearing note balance between Texas Gas and WGP.

      Operating  revenues were lower for the period indicated,  primarily due to
lower tracked costs, which are passed through to customers,  lower revenues from
traditional  firm services  primarily due to discounting  and lower  throughput,
partially  offset by higher  revenues from new services.  Total  deliveries were
517.7 Tbtu and 531.8 Tbtu for the nine months of 2001 and 2000, respectively.

      Operating costs and expenses decreased $1.9 million primarily attributable
to a $1.7  million  decrease  in  general  and  administrative  costs  primarily
resulting  from the 2000 office  consolidation  of Texas Gas with  Williams  Gas
Pipeline  Central,  Inc.  and lower  tracked  costs which are passed  through to
customers. The decrease in general and administrative costs was partially offset
by a $2.0  million  reserve  for the  settlement  of legal  matters  and  higher
charitable contributions.

                        FINANCIAL CONDITION AND LIQUIDITY

      Texas Gas is a  participant  with other  Williams  subsidiaries  in a $700
million  credit  agreement  under which Texas Gas may borrow up to $200 million,
subject to borrowings by other  affiliated  companies.  Interest rates vary with
current market conditions.  To date, Texas Gas has no amounts  outstanding under
this facility.

      As of September 30, 2001, Texas Gas has $100 million of shelf availability
remaining under a Registration  Statement filed with the Securities and Exchange
Commission in 1997.

      As a  participant  in Williams'  cash  management  program,  Texas Gas has
advances to and 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.

      Texas Gas expects to access public and private capital markets, as needed,
to finance its own capital requirements.

      In  accordance  with FAS 140,  Texas  Gas  changed  the  structure  of its
receivables program as of April 1, 2001. Upon that date, TGT Enterprises,  Inc.,
which formerly was a special purpose entity,  became a qualified special purpose
entity.  Texas Gas has an agreement to sell, on an ongoing basis, certain of its
trade receivables to the qualified special purpose entity. At September 30, 2001
Texas Gas had sold $12.6 million of its trade  receivables  to TGT  Enterprises,
Inc. in exchange  for $10.0  million in cash from a third party and a beneficial
interest in $2.6 million of the accounts  receivable from TGT Enterprises,  Inc.
At December 31, 2000, Texas Gas had sold $35.7 million of its trade  receivables
to TGT  Enterprises,  Inc.  in exchange  for $26.5  million in cash from a third
party and a note receivable of $9.2 million from TGT Enterprises, Inc.

      Texas Gas' capital expenditures for the first nine months of 2001 and 2000
were $44.5 million and $48.2 million,  respectively.  Capital  expenditures  for
2001 are expected to approximate $115.7 million.

      Texas Gas' debt as a percentage of total  capitalization  at September 30,
2001 and December 31, 2000 was 27.3% and 27.4%, respectively.

      On April  28,  2000,  Texas Gas filed a  general  rate  case  (Docket  No.
RP00-260) which became effective November 1, 2000, subject to refund.  This rate
case reflects a requested annual revenue increase of approximately  $81 million,
based on filed rates,  primarily  attributable  to increases in the utility rate
base, depreciation expense, rate of return and related taxes, and revised system
rate design  quantities.  Texas Gas also proposes 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
Commission  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 Commission  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,  the Indicated  Shippers,  protested the settlement.  On
September 21, 2001, the Administrative Law Judge severed the Indicated Shippers,
and certified the settlement to the Commission, as uncontested for the remaining
parties.   The  parties   are   awaiting   Commission   action  on  the  Judge's
certification. Texas Gas has provided an adequate reserve for amounts, including
interest, which may be refunded to customers.






<PAGE>


                           PART II - OTHER INFORMATION



ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

                (a)   Exhibits

                      None


                (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:   NOVEMBER 12, 2001                      BY: /S/  S. W. HARRIS
     ------------------------------               ----------------------------
                                                      S. W. Harris
                                        Controller and Chief Accounting Officer