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                       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, 1997

                                              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 1-7584


                          TRANSCONTINENTAL GAS PIPE LINE CORPORATION
                    (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                         DELAWARE                               74-1079400
              (STATE OR OTHER JURISDICTION OF               (I.R.S. EMPLOYER
              INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)

                  2800 POST OAK BOULEVARD
                      P. O. BOX 1396
                      HOUSTON, TEXAS                                  77251
         (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                  (ZIP CODE)

            REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 215-2000

                                             NONE
                           (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                            IF CHANGED SINCE LAST REPORT)


        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

 THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE, OUTSTANDING AS
OF SEPTEMBER 30, 1997 WAS 100.

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

                                              1

<PAGE>





                             PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS.

        COMPANY OR GROUP OF COMPANIES FOR WHICH REPORT IS FILED:

TRANSCONTINENTAL GAS PIPE LINE CORPORATION AND SUBSIDIARIES (TRANSCO)


     The accompanying  interim condensed  consolidated  financial  statements of
Transco do not include all notes in annual  financial  statements  and therefore
should be read in conjunction  with the  consolidated  financial  statements and
notes  thereto in Transco's  1996 Annual  Report on Form 10-K and 1997 First and
Second  Quarter  Reports  on Form 10-Q.  The  accompanying  unaudited  financial
statements  have not been  audited  by  independent  auditors  but  include  all
adjustments  both normal recurring and others which, in the opinion of Transco's
management,  are necessary to present fairly its financial position at September
30, 1997,  and results of operations  for the three months and nine months ended
September 30, 1997 and 1996, and cash flows for the nine months ended  September
30, 1997 and 1996.



                                           2

<PAGE>





                              TRANSCONTINENTAL GAS PIPE LINE CORPORATION

                                 CONDENSED CONSOLIDATED BALANCE SHEET
                                        (Thousands of Dollars)
                                              (Unaudited)
<TABLE>
<CAPTION>

                                                                          September 30,   December 31,
                                                                               1997           1996
                                                                          -------------   ------------
        ASSETS
<S>                                                                       <C>             <C>
Current Assets:
     Cash                                                                 $       2,225   $      1,774
     Receivables:
        Affiliates                                                               11,043          4,837
        Others                                                                   28,449         51,011
     Advances to affiliates                                                     236,821        148,496
     Transportation and exchange gas receivables:
        Affiliates                                                               23,851         22,111
        Others                                                                   68,218         72,900
     Inventories                                                                 96,286         69,461
     Deferred income tax asset                                                   88,889         76,192
     Other                                                                       21,933         19,807
                                                                          -------------   ------------
        Total current assets                                                    577,715        466,589
                                                                          -------------   ------------

Investments                                                                       2,300          5,865
                                                                          -------------   ------------

Property, Plant and Equipment:
     Natural gas transmission plant                                           3,900,502      3,738,550
     Less-Accumulated depreciation and amortization                             439,241        318,234
                                                                          -------------   ------------
        Total property, plant and equipment, net                              3,461,261      3,420,316
                                                                          -------------   ------------

Other Assets                                                                    156,955        166,757
                                                                          -------------   ------------

                                                                          $   4,198,231   $  4,059,527
                                                                          =============   ============


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

</TABLE>




                                              3

<PAGE>





                               TRANSCONTINENTAL GAS PIPE LINE CORPORATION

                                  CONDENSED CONSOLIDATED BALANCE SHEET
                                         (Thousands of Dollars)
                                               (Unaudited)
<TABLE>
<CAPTION>

                                                                          September 30,    December 31,
                                                                               1997            1996
                                                                          -------------    ------------
        LIABILITIES AND STOCKHOLDER'S EQUITY
<S>                                                                       <C>              <C>
Current Liabilities:
     Current maturities of long-term debt                                 $           -    $     99,000
     Payables:
        Affiliates                                                               46,852          70,283
        Others                                                                   85,219          84,026
     Transportation and exchange gas payables:
        Affiliates                                                                  370             190
        Other                                                                    18,641          27,050
     Accrued liabilities                                                        134,723         104,289
     Reserve for rate refunds                                                   167,657         172,823
                                                                          -------------    ------------
        Total current liabilities                                               453,462         557,661
                                                                          -------------    ------------

Long-Term Debt                                                                  830,521         681,076
                                                                          -------------    ------------

Other Long-Term Liabilities:
     Deferred income taxes                                                      838,157         833,928
     Other                                                                      181,419         167,648
                                                                          -------------    ------------
        Total other long-term liabilities                                     1,019,576       1,001,576
                                                                          -------------    ------------

Commitments and contingencies (Note 3)

Common Stockholder's Equity:
     Common stock $1.00 par value:
        100 shares authorized, issued and outstanding                                 -               -
     Premium on capital stock and other paid-in capital                       1,652,430       1,652,430
     Retained earnings                                                          242,242         166,784
                                                                          -------------    ------------
        Total common stockholder's equity                                     1,894,672       1,819,214
                                                                          -------------    ------------

                                                                          $   4,198,231    $  4,059,527
                                                                          =============    ============


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


                                              4

<PAGE>





                                TRANSCONTINENTAL GAS PIPE LINE CORPORATION

                                CONDENSED CONSOLIDATED STATEMENT OF INCOME
                                          (Thousands of Dollars)
                                                (Unaudited)
<TABLE>
<CAPTION>


                                                             For the Three             For the Three
                                                             Months Ended              Months Ended
                                                          September 30, 1997         September 30, 1996
                                                          ------------------         ------------------
<S>                                                       <C>                        <C>
Operating Revenues:
   Natural gas sales                                      $       163,819            $       140,164
   Natural gas transportation                                     148,641                    155,209
   Natural gas storage                                             35,003                     35,097
   Other                                                            1,991                      2,000
                                                          ----------------           ----------------
      Total operating revenues                                    349,454                    332,470
                                                          ----------------           ----------------

Operating Costs and Expenses:
   Cost of natural gas sales                                      163,819                    140,163
   Cost of natural gas transportation                               4,445                     19,574
   Operation and maintenance                                       45,017                     53,513
   Administrative and general                                      30,984                     27,311
   Depreciation and amortization                                   39,945                     39,800
   Taxes - other than income taxes                                  9,634                      9,240
   Other                                                              322                        249
                                                          ----------------           ----------------
      Total operating costs and expenses                          294,166                    289,850
                                                          ----------------           ----------------

Operating Income                                                   55,288                     42,620
                                                          ----------------           ----------------

Other (Income) and Other Deductions:
   Interest expense                                                17,935                     17,759
   Interest income - affiliates                                    (2,431)                    (1,842)
                   - other                                            (23)                      (180)
   Allowance for equity and borrowed funds used during
     construction (AFUDC)                                          (2,437)                    (2,210)
   Miscellaneous other deductions, net                                307                        384
                                                          ----------------           ----------------
      Total other deductions                                       13,351                     13,911
                                                          ----------------           ----------------

Income before Income Taxes                                         41,937                     28,709

Provision for Income Taxes                                         14,923                     11,163
                                                          ----------------           ----------------

Net Income                                                $        27,014            $        17,546  
                                                          ================           ================ 



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



                                                    5

<PAGE>




                                TRANSCONTINENTAL GAS PIPE LINE CORPORATION

                                CONDENSED CONSOLIDATED STATEMENT OF INCOME
                                          (Thousands of Dollars)
                                                (Unaudited)
<TABLE>
<CAPTION>


                                                             For the Nine              For the Nine
                                                             Months Ended              Months Ended
                                                          September 30, 1997         September 30, 1996
                                                          ------------------         ------------------
<S>                                                       <C>                        <C> 
Operating Revenues:
   Natural gas sales                                      $       475,280            $       595,225
   Natural gas transportation                                     456,519                    494,994
   Natural gas storage                                            106,155                    108,017
   Other                                                            6,112                      5,037
                                                          ----------------           ----------------
      Total operating revenues                                  1,044,066                  1,203,273
                                                          ----------------           ----------------

Operating Costs and Expenses:
   Cost of natural gas sales                                      475,280                    595,223
   Cost of natural gas transportation                              23,425                     63,626
   Operation and maintenance                                      136,915                    149,535
   Administrative and general                                      92,807                     91,895
   Depreciation and amortization                                  118,014                    129,965
   Taxes - other than income taxes                                 28,294                     27,565
   Other                                                            1,126                        763
                                                          ----------------           ----------------
      Total operating costs and expenses                          875,861                  1,058,572
                                                          ----------------           ----------------

Operating Income                                                  168,205                    144,701
                                                          ----------------           ----------------

Other(Income) and Other Deductions:
   Interest expense                                                51,250                     47,415
   Interest income - affiliates                                    (4,729)                    (4,042)
                   - other                                            (31)                      (436)
   Allowance for equity and borrowed funds used during
     construction (AFUDC)                                          (5,780)                    (4,768)
   Miscellaneous other deductions, net                              1,550                      2,322
                                                          ----------------           ----------------
      Total other deductions                                       42,260                     40,491
                                                          ----------------           ----------------

Income before Income Taxes                                        125,945                    104,210

Provision for Income Taxes                                         47,505                     40,492
                                                          ----------------           ----------------

Net Income                                                $        78,440            $        63,718
                                                          ================           ================



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

</TABLE>



                                                    6

<PAGE>




                                TRANSCONTINENTAL GAS PIPE LINE CORPORATION


                              CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                          (Thousands of Dollars)
                                                (Unaudited)
<TABLE>
<CAPTION>

                                                                                Nine Months Ended
                                                                                  September 30,
                                                                     --------------------------------------
                                                                          1997                    1996  
                                                                     --------------          --------------
<S>                                                                  <C>                     <C>  
Cash flows from operating activities:
   Net income                                                        $      78,440           $      63,718
   Adjustments to reconcile net income to net cash provided
     by (used in) operating activities:
      Depreciation and amortization                                        122,817                 133,836
      Deferred income taxes                                                 (8,468)                (52,582)
      Allowance for equity funds used during construction (AFUDC)           (3,997)                 (3,259)
      Changes in operating assets and liabilities:
         Receivables                                                        20,357                  39,063
         Receivables sold                                                   (4,000)                (21,000)
         Transportation and exchange gas receivables                         2,942                  34,711
         Inventories                                                       (26,825)                (10,681)
         Payables                                                          (13,564)               (119,550)
         Transportation and exchange gas payables                           (8,229)                (47,041)
         Accrued liabilities                                                30,401                 (41,178)
         Reserve for rate refunds                                           (5,166)                 75,317
         Other, net                                                         20,684                  21,016
                                                                      -------------          --------------
             Net cash provided by operating activities                     205,392                  72,370
                                                                      -------------          --------------

Cash flows from financing activities:
   Additions to long-term debt                                             150,000                 298,800
   Retirement of long-term debt                                            (99,000)               (225,000)
   Debt issue costs                                                           (248)                   (249)
   Dividends on common stock                                                (2,982)                 (3,164)
                                                                      -------------          --------------
             Net cash provided by financing activities                      47,770                  70,387
                                                                      -------------          --------------

Cash flows from investing activities:
   Property, plant and equipment:  
      Additions, net of equity AFUDC                                      (160,197)               (162,973)
      Changes in accounts payable and accrued liabilities                   (8,675)                 (3,235)
   Advances to affiliates, net                                             (88,325)                 23,881
   Other, net                                                                4,486                  (1,014)
                                                                      -------------          --------------
             Net cash used in investing activities                        (252,711)               (143,341)
                                                                      -------------          --------------

Net increase (decrease) in cash                                                451                    (584)
Cash at beginning of period                                                  1,774                   2,557
                                                                      -------------          --------------
Cash at end of period                                                 $      2,225           $       1,973
                                                                      =============          ==============



Supplemental disclosures of cash flow information:
  Cash paid (refunded) during the year for:
      Interest (exclusive of amount capitalized)                      $     56,179           $      44,219
      Income taxes paid                                                     35,496                 161,091
      Income tax refunds received                                          (11,759)                 (1,043)


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

</TABLE>

                                                    7

<PAGE>



                       TRANSCONTINENTAL GAS PIPE LINE CORPORATION

                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                          1.  CORPORATE STRUCTURE AND CONTROL

     Effective May 1, 1997, Transcontinental Gas Pipe Line Corporation (Transco)
became a  wholly-owned  subsidiary of Williams  Interstate  Natural Gas Systems,
Inc.,  which  is a  wholly-owned  subsidiary  of The  Williams  Companies,  Inc.
(Williams).  Prior to May 1, 1997,  Transco  was a  wholly-owned  subsidiary  of
Williams.

                               2.  BASIS OF PRESENTATION

     The condensed  consolidated  financial  statements  include the accounts of
Transco and its majority-owned subsidiaries.  Companies in which Transco and its
subsidiaries  own 20  percent  to 50  percent  of the  voting  common  stock are
accounted for under the equity method.

     The condensed consolidated financial statements have been prepared from the
books and records of Transco  without audit.  Certain  information  and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles have been condensed or omitted.
These condensed  consolidated financial statements should be read in conjunction
with the  consolidated  financial  statements and the notes thereto  included in
Transco's  1996 Annual Report on Form 10-K and included in Transco's  1997 First
and Second Quarter Reports on Form 10-Q.

     Through an agency agreement,  Williams Energy Services Company (WESCO),  an
affiliate of Transco,  manages all jurisdictional merchant gas sales of Transco,
receives all margins  associated  with such  business  and, as Transco's  agent,
assumes  all market and credit risk  associated  with  Transco's  jurisdictional
merchant gas sales.  Consequently,  Transco's  merchant gas sales service has no
impact on its operating income or results of operations.

     Certain  reclassifications  have been made in the 1996 financial statements
to conform to the 1997 presentation.

                       3.  CONTINGENT LIABILITIES AND COMMITMENTS

     There have been no new developments  from those described in Transco's 1996
Annual Report on Form 10-K or 1997 First and Second Quarter Reports on Form 10-Q
other than as described below.



                                           8

<PAGE>



RATE AND REGULATORY MATTERS

     GENERAL RATE CASE (DOCKET NO. RP97-71)

     On November 1, 1996,  Transco  submitted to the Federal  Energy  Regulatory
Commission  (FERC) a general  rate case filing  principally  designed to recover
costs associated with increased  capital  expenditures.  These increased capital
expenditures primarily relate to system reliability, integrity and Clean Air Act
compliance.

     When stated on a comparable  basis, the rates Transco placed into effect on
May 1, 1997,  represent an annual cost of service increase of approximately  $47
million  over  the  cost  of  service  underlying  the  rates  contained  in the
settlement  of Transco's  last general rate filing  (Docket No.  RP95-197).  The
rates,   which  are  subject  to  refund,   are  designed   using  the  straight
fixed-variable rate design method.

     By order issued  October 16, 1997, the  Administrative  Law Judge granted a
motion by all  active  parties,  including  Transco,  to extend  the  procedural
schedule  in this case by one  month to allow the  parties  the  opportunity  to
continue  discussions  relating to the possible settlement of all or portions of
the case. The hearing in this case,  which was originally  scheduled to begin on
November 4, 1997, is now scheduled for December 2, 1997.

     GENERAL RATE CASE (DOCKET NO. RP95-197)

     On June 19, 1996,  Transco filed a Stipulation and Agreement and settlement
rates. The agreement resolves cost of service (subject to the outcome of capital
structure and rate of return in the Phase I  proceeding),  throughput  level and
mix, and certain cost  allocation  and rate design  issues.  The agreement  also
reserves  certain  other issues for hearing in Phase II,  including the issue of
rolled-in pricing for incremental Leidy Line services. With the exception of one
party that filed  comments  opposing the  settlement  and one party that took no
position  on the merits of the  settlement,  all active  parties  and the FERC's
staff either supported the settlement or did not oppose it. On November 1, 1996,
the FERC issued an order  approving  the June 19  agreement,  and on February 3,
1997  approved an order  denying  rehearing of its November 1, 1996 order.  As a
result,  Transco made refunds on May 30, 1997 of  approximately  $79.0  million,
including  interest,  under Docket No. RP95-197 for which Transco had previously
provided a reserve.

     On August 1, 1997, the FERC issued an order modifying the initial  decision
issued on December 18, 1996 by the Administrative Law Judge (ALJ) in the Phase I
proceeding  determining the capital structure and rate of return for Transco. As
to capital  structure,  the FERC reversed the ALJ's use of the Williams  capital
structure,  and applied a new  modified  capital  structure  policy to find that
Transco's own capital structure,  consisting of 57.58 percent equity,  should be
used for developing the rate of return in this proceeding.  As to rate of return
on equity,  the FERC  affirmed  the overall  methodology  used by the ALJ in his
initial decision,  but reversed the ALJ's decision in order to revise the manner
in which the long-range growth component of that methodology is determined

                                           9

<PAGE>



to be  consistent  with the FERC's  recent  decisions  on that issue.  The order
requires  that  Transco  make a compliance  filing  consistent  with the revised
methodology,  and states that refunds will be determined  once the FERC rules on
that  compliance  filing.  Transco  has sought  rehearing  of the  FERC's  order
asserting, among other things, that the FERC's methodology for calculating rates
of return is flawed. Other parties in the case have also sought rehearing of the
FERC's order  claiming,  among other things,  that FERC should not have reversed
the ALJ with  respect  to the issue of the  appropriate  capital  structure  for
ratemaking  purposes.  Transco  has  provided  a reserve  which it  believes  is
adequate for any required refunds.

     RATE OF RETURN CALCULATION

     As discussed  above,  the FERC recently issued an order  addressing,  among
other things, the authorized rate of return for Transco's 1995 rate case (Docket
No.  95-197).  In the order,  the FERC  continued  its  practice of  utilizing a
methodology for calculating rates of return that incorporates a long-term growth
rate  component.  The long-term  growth rate component used by the FERC is now a
projection of U.S. gross domestic product growth rates.  Generally,  calculating
rates of return  utilizing a methodology  which includes a long-term growth rate
component  results  in rates of return  that are lower than they would be if the
long-term  growth  rate  component  were not  included  in the  methodology.  As
indicated above,  Transco has sought rehearing of the FERC order in an effort to
have the FERC change its rate of return methodology with respect to both pending
and future rate cases.  Additionally,  at a recent public FERC  meeting,  it was
announced that the FERC intended to convene early next year a public  conference
to consider rate of return issues,  including the  appropriateness of the FERC's
current methodology for calculating rates of return.

     GENERAL RATE CASE (DOCKET NO. RP92-137)

     On September  17, 1992,  the FERC issued a decision  addressing  the single
issue of the appropriate rate of return in Docket No. RP92-137.  The FERC, using
a hypothetical  capital  structure based on the average  capital  structure of a
group of seven publicly-traded companies with pipeline subsidiaries,  determined
Transco's  appropriate  rate of return on equity to be 14.45%.  The issue of the
appropriate  rate of return for Transco was appealed to the D.C.  Circuit Court.
On December 23, 1994, the D.C. Circuit Court issued an opinion  remanding to the
FERC for further  consideration  the FERC's  September 17, 1992 order.  The D.C.
Circuit  Court  determined  that the FERC had failed to explain  adequately  its
decisions to use a hypothetical  capital structure for Transco, to select a rate
of return on  equity at the top range of  reasonableness,  and to use as a proxy
group  to  develop   Transco's   hypothetical   capital  structure  a  group  of
publicly-traded  parent companies with pipeline subsidiaries rather than a group
of regulated  pipelines.  On April 10, 1996, the FERC issued its order on remand
and adopted Transco's capital structure as the appropriate capital structure for
ratemaking  purposes,  reversing  its previous  orders  adopting a  hypothetical
capital  structure.  The FERC made no adjustment to Transco's  rate of return on
equity, adopting a 14.45% rate of return on equity. The FERC directed Transco to
make refunds in accordance with the April 10, 1996 order. On July 23, 1996,

                                          10

<PAGE>



the FERC denied  rehearing of the April 10, 1996 order.  On September  17, 1996,
Transco  made  refunds  required  under the FERC  order,  for which  Transco had
previously  provided a reserve.  On September 20, 1996,  certain parties filed a
petition for review of the FERC's April 10, 1996 and July 23, 1996 orders in the
D.C.  Circuit  Court.  On November  5, 1997 the D.C.  Circuit  Court  denied the
petition.

     ORDER NO. 94-A COSTS (DOCKET NO. RP92-149)

     On January 29, 1997,  the FERC issued an order  approving  the October 1993
settlement between Transco and Columbia Gas Transmission  Corporation (Columbia)
and directing  Columbia to refund to Transco all amounts refunded to Columbia in
excess of the amount  required by the October  1993  settlement.  On January 30,
1997 Columbia filed with the FERC a request for rehearing and a request that the
FERC essentially stay Columbia's  refund  obligation.  On February 28, 1997, the
FERC issued an order  denying  rehearing  of its January 29 order.  In the third
quarter of 1997, Transco entered into an agreement with Columbia, which required
Columbia to pay $5.4 million to Transco in  settlement  of this matter.  Transco
received the payment in September 1997.

LEGAL PROCEEDINGS

     ROYALTY CLAIMS AND LITIGATION In connection  with Transco's  renegotiations
with producers to resolve take-or-pay and other contract claims and to amend gas
purchase  contracts,  Transco has entered  into  certain  settlements  which may
require  the  indemnification  by  Transco  of  certain  claims  for  additional
royalties  which  the  producers  may be  required  to pay as a  result  of such
settlements.  Transco has been made aware of demands on producers for additional
royalties  and such  producers  may receive  other demands which could result in
claims  against  Transco  pursuant to the  indemnification  provisions  in their
respective  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 Transco.

     On March 15, 1994, a lawsuit was filed in the 189th Judicial District Court
of  Harris  County,  Texas  (Texaco,  Inc.  vs.  Transcontinental  Gas Pipe Line
Corporation).  In this  lawsuit,  the plaintiff  has claimed  approximately  $23
million, including interest and attorneys' fees for reimbursements of settlement
amounts paid to royalty owners. On October 16, 1997, a jury verdict in this case
found that Transco was required to pay Texaco $14.5  million plus $3.75  million
in attorney's  fees. The trial judge  deferred  entering  judgment  (which would
include a determination of any amounts owed Texaco for interest on the principal
amount of the judgment) and directed the parties to  participate in mediation of
this matter. Transco denied liability in the litigation and continues to believe
that it has  meritorious  defenses  to the  claims  which it  intends  to pursue
vigorously.

     As previously  reported on Transco's 1996 Form 10-K, Transco is involved in
litigation  with one other  producer,  Freeport-McMoRan,  Inc.,  with respect to
royalty  indemnification  issues.  There have been no new  developments  in that
litigation.


                                          11

<PAGE>



     OTHER  LITIGATION In July 1996,  Canadian  Occidental  of California  (CXY)
filed a lawsuit  against  Transco and certain  Transco  affiliates  demanding an
accounting relating to alleged take-or-pay deficiencies under seven gas purchase
contracts  for the years  1982 and  1983.  CXY has since  amended  its  original
petition  to demand an  accounting  under the seven  contracts  through the year
1992.  Transco has answered the lawsuit asserting that the alleged  deficiencies
were settled in an agreement with CXY in 1986 or, alternatively, that the claims
are barred by the statute of limitation.

SUMMARY

     While  no  assurances  may be  given,  Transco  does not  believe  that the
ultimate  resolution of the foregoing  matters and those  described in Transco's
1996  Annual  Report on Form 10-K and 1997 First and Second  Quarter  Reports on
Form 10-Q, taken as a whole and after consideration of amounts accrued, recovery
from customers,  insurance coverage or other indemnification arrangements,  will
have a materially  adverse  effect upon  Transco's  future  financial  position,
results of operations and cash flow requirements.

4.  DEBT AND FINANCING ARRANGEMENTS

LONG-TERM DEBT

     Williams and certain of its subsidiaries, including Transco, are parties to
a $1 billion credit agreement (Credit Agreement), under which Transco can borrow
up to $400 million.  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. As of September 30, 1997,  Transco had no  outstanding  borrowings
under this agreement.

     On January 15, 1997, Transco redeemed $99 million of its 8-1/8% Notes.

     On July 31, 1997,  Transco  entered  into a $150  million,  five-year  bank
agreement,  with variable  interest rates based on the London Interbank  Offered
Rate.

     In  September  1997,  Williams and certain of its  subsidiaries,  including
Transco,  initiated a restructuring  of its debt portfolio.  On October 8, 1997,
Transco  borrowed $160 million under the Credit Agreement to fund the redemption
of its entire $150 million issue of 9-1/8% Debentures originally due February 1,
2017, at a total redemption price of $156.4 million, plus accrued interest. As a
result of the  revaluation of Transco's  debt at the time of its  acquisition by
Williams in 1995, Transco will record an extraordinary gain of $2.9 million, net
of tax,  from the early  redemption of the 9-1/8%  Debentures.  The $6.4 million
premium will be amortized  over the remaining  original  life of the  debentures
based on FERC accounting requirements.

SHORT-TERM DEBT

     Transco is a party to three short-term money market  facilities under which
it can  borrow up to an  aggregate  of $135  million.  Interest  rates vary with
current market

                                          12

<PAGE>



conditions based on the applicable bank's rate at the time of the borrowings. As
of  September  30,  1997,  Transco  had no  outstanding  borrowings  under these
facilities.

SALE OF RECEIVABLES

     Transco is a party to an agreement  that expires in February  1998 pursuant
to which  Transco  can  sell to an  investor  up to $100  million  of  undivided
interests  in  certain  of its trade  receivables.  At  September  30,  1997 and
December 31, 1996, interests in $96 million and $100 million,  respectively,  of
these receivables were held by the investor.

                         5.  ADOPTION OF ACCOUNTING STANDARDS

     The  Financial  Accounting  Standards  Board issued  Statement of Financial
Accounting  Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," effective for transactions
occurring  after  December  31,  1996.  The  adoption  of this  standard  had no
significant impact on Transco's  consolidated  results of operations,  financial
position or cash flows.

     The  Financial  Accounting  Standards  Board has issued two new  accounting
standards,  SFAS No. 130,  "Reporting  Comprehensive  Income," and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," effective
for fiscal years beginning after December 15, 1997. The pronouncements  will not
materially change Transco's financial reporting or disclosures.

ITEM 2.    MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS.

     The  following   discussion   should  be  read  in  conjunction   with  the
consolidated financial statements,  notes and management's  discussion contained
in Items 7 and 8 of Transco's  1996 Annual  Report on Form 10-K and in Transco's
1997  First and  Second  Quarter  Reports  on Form  10-Q and with the  condensed
consolidated financial statements and notes contained in this report.

                                 RESULTS OF OPERATIONS

NET INCOME AND OPERATING INCOME

     Transco's net income for the nine months ended September 30, 1997 was $78.4
million  compared  to net  income of $63.7  million  for the nine  months  ended
September  30, 1996.  Operating  income for the nine months ended  September 30,
1997 was $168.2  million  compared to $144.7  million for the nine months  ended
September 30, 1996. The higher  operating  income of $23.5 million was primarily
attributable to lower operation and maintenance expenses,  benefits of the final
phase of the  Southeast  Expansion  Projects  placed in service in late 1996 and
other capital projects  included in Docket No. RP97-71 placed into effect on May
1, 1997 and a $5.4  million  credit to cost of natural gas  transportation  as a
result of a  settlement  related  to a prior rate  proceeding  (see Note 3). The
positive  operating income variance was partially offset at the net income level
by

                                          13

<PAGE>



higher  interest  expense of $3.8  million due  primarily  to funding of capital
projects,  partially  offset  by a  greater  allowance  for  funds  used  during
construction of $1.0 million.

OPERATING EXPENSES

     Excluding the cost of sales and transportation of $499 million for the nine
months ended  September 30, 1997 and $659 million for the  comparable  period in
1996, Transco's operating expenses for the nine months ended September 30, 1997,
were  approximately  $22.6 million lower than the comparable period in 1996. The
decrease was due to lower  depreciation  and  amortization  of $12.0 million and
lower   operation  and  maintenance   expenses  of  $12.6  million.   The  lower
depreciation and amortization was due to a reduction in depreciation  rates that
were  established in Transco's June 1996 Stipulation and Agreement in Docket No.
RP95-197 and that  continued  to be  reflected  in rates in Docket No.  RP97-71.
However,  the  effects  of the  lower  depreciation  rates on  depreciation  and
amortization  were offset by a  corresponding  decrease in  revenues.  The lower
operation and maintenance  expense was primarily due to a $7.7 million  decrease
in miscellaneous  contractual  services, a $2.5 million decrease in professional
services,  a $2.5 million  decrease in lube oil and odorants  expense and a $2.3
million  decrease in other  supplies and  expenditures,  partly offset by a $2.1
million  increase in charges from others for the  operation  of certain  Transco
facilities.

TRANSPORTATION SERVICES

     Transco's operating revenues related to its transportation services for the
nine months ended September 30, 1997 were $457 million, compared to $495 million
for the nine months ended September 30, 1996. The lower transportation  revenues
were primarily due to the effects of having passed through to ratepayers a lower
level of reimbursable  costs and lower  depreciation costs that are recovered in
Transco's  rates,  partly  offset  by the  benefits  of the  final  phase of the
Southeast  Expansion  Projects  placed in service in late 1996 and other capital
projects included in Docket No. RP97-71 placed into effect on May 1, 1997.

     As shown in the table below,  Transco's  total  market-area  deliveries and
production-area  deliveries  for  the  nine  months  ended  September  30,  1997
decreased  5.2 TBtu (1%) and 8.7 TBtu (5%),  respectively,  when compared to the
same period in 1996. The decreased  deliveries were mainly due to milder weather
conditions in the first quarter of 1997 as compared to the same period in 1996.

     As a result of a straight  fixed-variable  (SFV) rate design,  increases or
decreases in firm transportation volumes have no significant impact on operating
income. Increases or decreases in interruptible  transportation volumes can have
an impact on operating income.


                                          14

<PAGE>

<TABLE>
<CAPTION>

                                                          Nine Months
                                                      Ended September 30,
                                                      --------------------
Transco System Deliveries (TBtu)                        1997         1996
--------------------------------                        ----         ----

<S>                                                   <C>          <C>
Market-area deliveries:
    Long-haul transportation                            698.0        699.9
    Market-area transportation                          301.6        304.9
                                                      -------      -------
        Total market-area deliveries                    999.6      1,004.8
Production-area transportation                          154.3        163.0
                                                      -------      -------
Total system deliveries                               1,153.9      1,167.8
                                                      =======      =======


Average Daily Transportation Volumes (TBtu)               4.2          4.3
Average Daily Firm Reserved Capacity (TBtu)               5.5          5.1
</TABLE>

    Transco's  facilities are divided into seven rate zones. Four are located in
the  production  area and  three  are  located  in the  market  area.  Long-haul
transportation is gas that is received in one of the  production-area  zones and
delivered in a market-area zone. Market-area  transportation is gas that is both
received and delivered within market-area zones. Production-area  transportation
is gas that is both received and delivered within production-area zones.

    See Note 3 of the Notes to Condensed Consolidated Financial Statements for a
discussion of recent developments in Transco's rate and regulatory matters.

SALES SERVICES

    Transco makes  jurisdictional  merchant gas sales to customers pursuant to a
blanket  sales  certificate  issued by the FERC,  with most of those sales being
made  through a Firm Sales (FS)  program  which  gives  customers  the option to
purchase  daily  quantities of gas from Transco at  market-responsive  prices in
exchange for a demand charge payment.

    Through an agency agreement,  WESCO manages all jurisdictional  merchant gas
sales of Transco,  receives all margins  associated  with such  business and, as
Transco's  agent,  assumes all market and credit risk  associated with Transco's
jurisdictional  merchant gas sales.  Consequently,  Transco's merchant gas sales
service has no impact on its operating income or results of operations.

    Transco's  operating  revenues for the nine months ended  September 30, 1997
related to its sales  services  decreased  $120  million to $475  million,  when
compared  to the same  period  in 1996.  The  decrease  was  primarily  due to a
significantly  lower  volume of gas sales in Transco's  jurisdictional  merchant
sales services as shown in the table below.  However,  this decrease in revenues
had no  effect  on  Transco's  operating  income or net  income  variances  when
compared  to the prior  year  since the  decrease  in  revenues  was offset by a
corresponding decrease in the cost of sales.


                                          15

<PAGE>

<TABLE>
<CAPTION>
                                                           Nine Months
                                                       Ended September 30,
                                                       -------------------
Gas Sales Volumes (TBtu)                                1997         1996
------------------------                                ----         ----

<S>                                                     <C>          <C>  
Long-term sales                                         149.1        167.5
Short-term sales                                         11.0         33.6
                                                        -----        -----
    Total gas sales                                     160.1        201.1
                                                        =====        ===== 
</TABLE>


STORAGE SERVICES

    Transco's  operating  revenues related to storage services of $106.2 million
for the nine months ended September 30, 1997 were comparable to storage revenues
of $108.0 million in the same period in 1996.

                            CAPITAL RESOURCES AND LIQUIDITY

METHOD OF FINANCING

    Transco  funds its  capital  requirements  with cash  flows  from  operating
activities,  including  the  sale of trade  receivables,  by  accessing  capital
markets,  by repayments of funds advanced to Williams,  by borrowings  under the
Credit  Agreement  and  short-term  money  market  facilities  and, if required,
advances  from  Williams.  At  September  30,  1997,  there were no  outstanding
borrowings under the Credit Agreement, short-term money market facilities or the
short term  credit  facility.  Advances  due Transco by  Williams  totaled  $237
million.

    On July 31,  1997,  Transco  entered  into a $150  million,  five-year  bank
agreement,  with variable  interest rates based on the London Interbank  Offered
Rate. Proceeds were used for general corporate purposes.

    In  September  1997,  Williams  and certain of its  subsidiaries,  including
Transco,  initiated a restructuring  of its debt portfolio.  On October 8, 1997,
Transco  borrowed $160 million under the Credit Agreement to fund the redemption
of $150 million of its 9-1/8%  Debentures at a total  redemption price of $156.4
million, plus accrued interest.

    In the fourth quarter of 1997,  Transco also plans to access capital markets
to fund its expansion projects and other general corporate requirements. Transco
believes any additional financing can be obtained on reasonable terms.

CAPITAL EXPENDITURES

    As shown in the table below,  Transco's  capital  expenditures  for the nine
months ended September 30, 1997 were $168.9 million,  compared to $166.2 million
for the nine months ended September 30, 1996.



                                          16

<PAGE>


<TABLE>
<CAPTION>


                                                              Nine Months
                                                           Ended September 30,
                                                        -----------------------
Capital Expenditures                                       1997         1996
--------------------                                       ----         ----
                                                              (In Millions)

<S>                                                        <C>         <C>   
Market-Area Projects                                       $ 64.1      $ 26.2
Supply-Area Projects                                         19.4           -
Maintenance of Existing Facilities and Other Projects        85.4       140.0
                                                           ------      ------
Total Capital Expenditures                                 $168.9      $166.2
                                                           ======      ======

</TABLE>


     Transco's capital  expenditure  budget for 1997 and future capital projects
are  discussed in its 1996 Annual  Report on Form 10-K and 1997 First and Second
Quarter Reports on Form 10-Q. The following describes  significant  developments
related to those projects and any new projects proposed by Transco.

     INDEPENDENCE PIPELINE PROJECT In March 1997,  Independence Pipeline Company
(Independence)  filed for FERC  approval  to  construct  and  operate a pipeline
consisting  of  approximately  370  miles  of  36-inch  diameter  pipe  with  an
anticipated annual gas  transportation  capacity of 838.5 million cubic feet per
day  (MMcf/d).  The  pipeline  will extend  from ANR  Pipeline  Company's  (ANR)
existing compressor station at Defiance,  Ohio to Transco's facilities at Leidy,
Pennsylvania.  During September 1997,  Independence filed with the FERC executed
precedent agreements for 530 MMcf/d of annual firm transportation  service for a
term of ten (10)  years.  On  September  23,  1997,  the  existing  partners  in
Independence  (subsidiaries of Transco and ANR) executed a Partnership  Interest
Purchase  and Sale  Agreement  pursuant to which a  wholly-owned  subsidiary  of
National  Fuel Gas  Company  would own 25% of  Independence  upon the receipt of
necessary regulatory approvals and the satisfaction of other closing conditions,
with an option  to  become  an equal  partner.  Negotiations  are  ongoing  with
additional  potential  partners.  The Independence  project is expected to be in
service for the 1999- 2000 winter heating season.

     1998  CHEROKEE  EXPANSION  PROJECT On September  30, 1997,  the FERC made a
preliminary  determination  that the 1998 Cherokee Expansion Project is required
by the  public  convenience  and  necessity  pending  the  outcome of the FERC's
environmental  review of the  proposal.  The  project  is  expected  to  provide
approximately  87 MMcf/d of additional firm  transportation  capacity in Alabama
and Georgia by the 1998-1999  winter heating  season at a cost of  approximately
$66 million.

     PIEDMONT/MAIDEN  LATERAL  EXPANSION  PROJECT On August 12,  1997,  the FERC
issued a certificate  authorizing  Transco to expand its existing Maiden Lateral
to Piedmont  Natural Gas Company,  Inc. in Lincoln and Catawba  Counties,  North
Carolina.  The project  facilities  include 17.77 miles of 16-inch pipeline loop
and an expansion of Transco's existing Lowesville Meter Station.  The project is
expected to be placed into service for the 1997-1998 winter heating season.


                                          17

<PAGE>



     MOBILE BAY LATERAL  EXPANSION  PROJECT On October 29, 1997, the FERC made a
preliminary  determination  that the Mobile  Bay  Lateral  Expansion  Project is
required  by the public  convenience  and  necessity  pending the outcome of the
FERC's environmental review of the proposal.  The project is expected to provide
new capacity of 350 MMcf/d from the outer continental shelf to Transco's Station
82 and increase  capacity on the existing onshore lateral from 520 MMcf/d to 784
MMcf/d.  The project is targeted to be in service in two phases during 1998 at a
cost of approximately $120 million.

     CARDINAL  PIPELINE  SYSTEM  PROJECT On November 6, 1997, the North Carolina
Utilities  Commission issued an order authorizing  Cardinal Extension Company to
construct,  own and operate  approximately 67 miles of 24-inch diameter pipeline
from the terminus of the existing Cardinal pipeline to new interconnections near
Clayton County, North Carolina, and approving rates contained in the Stipulation
filed by Cardinal Extension.  This project will provide an additional 140 MMcf/d
of new firm  transportation  capacity to North Carolina markets and has a target
in-service date of November 1, 1999.


     POCONO EXPANSION  PROJECT On November 1, 1997, this project,  which expands
firm transportation  service on Transco's Leidy Line by approximately 35 MMcf/d,
was placed into service.

     SUNBELT EXPANSION PROJECT On November 1, 1997, this project was also placed
into service.  Sunbelt  provides  approximately  146 MMcf/d of  additional  firm
transportation service to markets in Georgia, South Carolina and North Carolina.

OTHER CAPITAL REQUIREMENTS AND CONTINGENCIES

     Transco's capital  requirements and contingencies are discussed in its 1996
Annual  Report on Form 10-K.  Other than as  described in Note 3 of the Notes to
Condensed  Consolidated  Financial  Statements  and in Transco's  1997 First and
Second Quarter Reports on Form 10-Q,  there have been no new  developments  from
those  described  in  Transco's  1996 Annual  Report on Form 10-K with regard to
other capital requirements and contingencies.

CONCLUSION

     Although no assurances can be given,  Transco  currently  believes that the
aggregate of cash flows from operating activities, supplemented, when necessary,
by repayments of funds advanced to Williams,  advances or capital  contributions
from Williams and  borrowings  under the Credit  Agreement or  short-term  money
market  facilities,  will provide Transco with sufficient  liquidity to meet its
capital requirements.  Transco also expects to access public and private markets
on reasonable terms to finance its capital requirements.



                                          18

<PAGE>



                               PART II - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS.

          See  discussion  of  legal  proceedings  in  Note  3 of the  Notes  to
          Condensed Consolidated Financial Statements included herein.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

          (a)   Exhibits.

                None.

          (b)   Reports on Form 8-K.

                None


                                          19

<PAGE>




                                        SIGNATURE


Pursuant to the  requirements of Section 13 or 15(d) 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.




                                      TRANSCONTINENTAL GAS PIPE LINE
                                      CORPORATION (Registrant)




Dated:  November 14, 1997             By /s/ James C. Bourne
                                      ----------------------------------
                                      James C. Bourne
                                      Controller
                                      (Principal Accounting Officer)









                                          20