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, 1996.

                                          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)

                                    (713) 215-2000
                      (Registrant's telephone number, including area code)

                                         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, 1996 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 financial statements and notes thereto in
Transco's  1995  Annual  Report on Form 10-K and 1996 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, 1996,  and
results of operations  for the three months and nine months ended  September 30,
1996 and 1995,  and cash flows for the nine months ended  September 30, 1996 and
1995.



                                           2

<PAGE>




                              TRANSCONTINENTAL GAS PIPE LINE CORPORATION

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

                                                                          September 30,    December 31,
                                                                              1996             1995
                                                                         --------------   -------------
        ASSETS
<S>                                                                      <C>               <C>
Current Assets:
     Cash                                                                $     1,973       $     2,557
     Deposits                                                                  2,443             6,426
     Receivables:
        Affiliates                                                             1,805             2,848
        Others                                                                32,461            49,481
     Advances to affiliates                                                   80,618           104,499
     Transportation and exchange gas receivables:
        Affiliates                                                            44,410            28,309
        Others                                                                62,498           113,310
     Inventories                                                              67,508            56,827
     Deferred income tax benefits                                             85,241            37,640
     Other                                                                    19,930            22,170
                                                                         -----------       -----------
        Total current assets                                                 398,887           424,067
                                                                         -----------       -----------

Investments                                                                    5,338            11,256
                                                                         -----------       -----------

Property, Plant and Equipment :
     Natural gas transmission plant                                        3,605,057         3,455,154
     Less-Accumulated depreciation and amortization                          289,083           170,417
                                                                         -----------       -----------
        Property, plant and equipment, net                                 3,315,974         3,284,737
                                                                         -----------       -----------

Other Assets                                                                 215,766           201,728
                                                                         -----------       -----------

                                                                         $ 3,935,965       $ 3,921,788
                                                                         ===========       ===========


              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,
                                                                              1996             1995
                                                                         --------------   -------------
      LIABILITIES AND STOCKHOLDER'S EQUITY
<S>                                                                      <C>               <C>
Current Liabilities:
     Payables:
        Affiliates                                                       $    34,936       $    84,590
        Others                                                                55,625           128,757
     Transportation and exchange gas payables:
        Affiliates                                                               190               841
        Other                                                                 30,069            76,459
     Accrued liabilities                                                     115,625           154,236
     Reserve for rate refunds                                                154,156            55,123
     Other                                                                         -                91
                                                                         -----------       -----------
         Total current liabilities                                           390,601           500,097
                                                                         -----------       -----------

Long-Term Debt                                                               729,814           659,171
                                                                         -----------       -----------

Other Liabilities:
   Deferred income taxes                                                     834,609           840,189
   Other                                                                     191,902           185,500
                                                                         -----------       -----------
         Total other liabilities                                           1,026,511         1,025,689
                                                                         -----------       -----------

Commitments and contingencies (Note C)

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                                                         136,609            84,401
                                                                         -----------       -----------
         Total common stockholder's equity                                 1,789,039         1,736,831
                                                                         -----------       -----------

                                                                         $ 3,935,965       $ 3,921,788
                                                                         ===========       ===========


           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, 1996    September 30, 1995
                                                                           ------------------    ------------------
<S>                                                                            <C>                   <C>
Operating Revenues:
   Natural gas sales                                                           $  140,164            $  129,821
   Natural gas transportation                                                     155,209               171,292
   Natural gas storage                                                             35,097                38,091
   Other                                                                            2,000                 1,147
                                                                               ----------            ----------
      Total operating revenues                                                    332,470               340,351
                                                                               ----------            ----------

Operating Costs and Expenses:
   Cost of natural gas sales                                                      140,163               129,495
   Cost of natural gas transportation                                              19,574                32,873
   Operation and maintenance                                                       53,513                54,090
   Administrative and general                                                      29,305                33,277
   Depreciation and amortization                                                   37,806                42,161
   Taxes - other than income taxes                                                  9,240                 9,959
   Other                                                                              249                    91
                                                                               ----------            ----------
      Total operating costs and expenses                                          289,850               301,946
                                                                               ----------            ----------

Operating Income                                                                   42,620                38,405
                                                                               ----------            ----------

Other (Income) and Other Deductions:
   Interest expense - other                                                        17,759                14,303
   Interest income  - affiliates                                                   (1,842)                 (418)
                    - other                                                          (180)                 (127)
   Allowance for equity and borrowed funds used during construction (AFUDC)        (2,210)               (2,318)
   Miscellaneous other deductions, net                                                384                 1,356
                                                                               ----------            ----------
      Total other (income) and other deductions                                    13,911                12,796
                                                                               ----------            ----------



Income Before Income Taxes                                                         28,709                25,609

Provision for Income Taxes                                                         11,163                 9,076
                                                                               ----------            ----------

Net Income                                                                         17,546                16,533

Dividends on Preferred Stock                                                            -                     -
                                                                               ----------            ----------

Common Stock Equity in Net Income                                              $   17,546            $   16,533
                                                                               ==========            ==========



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


                                              5

<PAGE>




The acquisition of Transco Energy Company and subsidiaries,  including  Transco,
by The  Williams  Companies  was  accounted  for  using the  purchase  method of
accounting.  Accordingly,  the purchase  price was "pushed down" and recorded in
the   accompanying   consolidated   financial   statements   which  affects  the
comparability of the post-acquisition and pre-acquisition  results of operations
and cash flows.

                                TRANSCONTINENTAL GAS PIPE LINE CORPORATION

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


                                                             Post-Acquisition                Pre-Acquisition
                                                  --------------------------------------  |  ----------------
                                                                        For the Period    |   For the Period
                                                     For the Nine      January 18, 1995   |   January 1, 1995
                                                     Months Ended             to          |         to
                                                  September 30, 1996  September 30, 1995  |  January 17, 1995
                                                  ------------------  ------------------  |  ----------------
<S>                                                   <C>                 <C>             |    <C>
Operating Revenues:                                                                       |
   Natural gas sales                                  $  595,225          $  390,662      |     $  31,701
   Natural gas transportation                            494,994             488,652      |        32,775
   Natural gas storage                                   108,017             108,975      |         7,452
   Other                                                   5,037               3,963      |           133
                                                      ----------          ----------      |     ---------
      Total operating revenues                         1,203,273             992,252      |        72,061
                                                      ----------          ----------      |     ---------
                                                                                          |
Operating Costs and Expenses:                                                             |
   Cost of natural gas sales                             595,223             390,189      |        31,691
   Cost of natural gas transportation                     63,626              90,145      |         6,279
   Operation and maintenance                             149,535             141,020      |         8,722
   Administrative and general                             97,804              98,036      |         7,063
   Provision for executive severance benefits                  -                   -      |        16,048
   Depreciation and amortization                         124,056             111,816      |         5,560
   Taxes - other than income taxes                        27,565              25,515      |         1,558
   Other                                                     763                 785      |            53
                                                      ----------          ----------      |     ---------
      Total operating costs and expenses               1,058,572             857,506      |        76,974
                                                      ----------          ----------      |     ---------
                                                                                          |
Operating Income (Loss)                                  144,701             134,746      |        (4,913)
                                                      ----------          ----------      |     ---------
                                                                                          |
                                                                                          |
Other (Income) and Other Deductions:                                                      |
   Interest expense - affiliates                               -                 305      |             2
                    - other                               47,415              41,094      |         2,678
   Interest income  - affiliates                          (4,042)             (1,081)     |          (207)
                    - other                                 (436)               (656)     |           (12)
   Allowance for equity and borrowed funds used during                                    |
     construction (AFUDC)                                 (4,768)             (4,930)     |          (234)
   Miscellaneous other deductions, net                     2,322               2,094      |           213
                                                      -----------         ----------      |     ---------
      Total other (income) and other deductions            40,491             36,826      |         2,440
                                                      -----------         ----------      |     ---------
                                                                                          |
Income (Loss) before Income Taxes                         104,210             97,920      |        (7,353)
                                                                                          |
Provision for Income Taxes                                 40,492             36,483      |         2,309
                                                      -----------         ----------      |     ---------
                                                                                          |
Net Income (Loss)                                          63,718             61,437      |        (9,662)
                                                                                          |
Dividends on Preferred Stock                                    -                722      |           194
                                                      -----------         ----------      |     ---------
                                                                                          |
Common Stock Equity in Net Income (Loss)              $    63,718         $   60,715      |     $  (9,856)
                                                      ===========         ==========      |     =========





  The  accompanying  condensed  notes are an  integral  part of these  condensed consolidated financial statements.
</TABLE>
                                              6
<PAGE>

The acquisition of Transco Energy Company and subsidiaries,  including  Transco,
by The  Williams  Companies  was  accounted  for  using the  purchase  method of
accounting.  Accordingly,  the purchase  price was "pushed down" and recorded in
the   accompanying   consolidated   financial   statements   which  affects  the
comparability of the post-acquisition and pre-acquisition  results of operations
and cash flows.

                                TRANSCONTINENTAL GAS PIPE LINE CORPORATION
                              CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                          (Thousands of Dollars)
                                                (Unaudited)
<TABLE>
<CAPTION>

                                                                              Post-Acquisition                 Pre-Acquisition
                                                                  ----------------------------------------  |  ----------------
                                                                                          For the Period    |    For the Period
                                                                    For the Nine         January 18, 1995   |   January 1, 1995
                                                                    Months Ended                to          |         to
                                                                  September 30, 1996    September 30, 1995  |  January 17, 1995
                                                                                                            |
                                                                  ------------------    ------------------  |  ----------------
<S>                                                                  <C>                   <C>              |     <C>
Cash flows from operating activities:                                                                       |
   Net income (loss)                                                 $    63,718           $    61,437      |     $    (9,662)
   Adjustments to reconcile net income to net cash provided                                                 |
     by (used in) operating activities:                                                                     |
      Depreciation and amortization                                      133,836               121,998      |           6,083
      Deferred income taxes                                              (52,582)              (15,878)     |           5,348
      Provision for (payment of) executive severance benefits               (409)              (13,980)     |          16,048
      Allowance for equity funds used during construction (AFUDC)         (3,259)               (4,133)     |            (190)
      Changes in operating assets and liabilities:                                                          |
         Receivables                                                      18,063               (18,411)     |          (7,114)
         Transportation and exchange gas receivables                      34,711               (36,136)     |          (5,701)
         Inventories                                                     (10,681)                2,847      |          (2,647)
         Payables                                                       (119,550)               22,464      |          (8,059)
         Transportation and exchange gas payables                        (47,041)               35,901      |           4,934
         Accrued liabilities                                             (41,178)               26,266      |          (4,755)
         Reserve for rate refunds                                         75,317               (21,551)     |         (26,846)
         Other, net                                                       21,176                (8,925)     |             153
                                                                     -----------           -----------      |     -----------
             Net cash provided by (used in) operating activities          72,121               151,899      |         (32,408)
                                                                     -----------           -----------      |     -----------
                                                                                                            |
Cash flows from financing activities:                                                                       |
   Capital contribution by parent                                              -                 5,539      |               -
   Additions to long-term debt                                           298,800                50,000      |               -
   Retirement of long-term debt                                         (225,000)              (50,000)     |               -
   Additions to notes payable                                                  -                40,000      |               -
   Retirement of notes payable                                                 -               (40,000)     |               -
   Retirement of preferred stock                                               -               (49,744)     |               -
   Advances from affiliates, net                                               -                (8,195)     |           8,195
   Dividends on preferred stock                                                -                (1,647)     |               -
   Dividends on common stock                                              (3,164)                    -      |               -
                                                                     -----------           -----------      |     -----------
             Net cash provided by (used in) financing activities          70,636               (54,047)     |           8,195
                                                                     -----------           -----------      |     -----------
                                                                                                            |
Cash flows from investing activities:                                                                       |
   Property, plant and equipment (PP&E), net of equity AFUDC            (162,973)             (186,465)     |          (3,797)
   Changes in accounts payable and accrued liabilities - PP&E             (3,235)               (1,598)     |          (1,099)
   Sale of assets                                                              -                11,874      |               -
   Advances to affiliates, net                                            23,881                46,121      |          63,599
   Other, net                                                             (1,014)                  (93)     |             (24)
                                                                     -----------           -----------      |     -----------
             Net cash provided by (used in) investing activities        (143,341)             (130,161)     |          58,679
                                                                     -----------           -----------      |     -----------
                                                                                                            |
Net increase (decrease) in cash and cash equivalents                        (584)              (32,309)     |          34,466
Cash and cash equivalents at beginning of period                           2,557                36,094      |           1,628
                                                                     -----------           -----------      |     -----------
Cash and cash equivalents at end of period                           $     1,973           $     3,785      |     $    36,094
                                                                     ===========           ===========      |     ===========
                                                                                                            |
                                                                                                            |
                                                                                                            |
Supplemental  disclosures of cash flow information:                                                         |
 Cash paid (refunded) during the year for :                                                                 |
      Interest (net of amount capitalized)                           $    44,219           $    40,387      |     $     5,552
      Income taxes paid                                                  161,091                26,905      |          19,427
      Income tax refunds received                                         (1,043)               (1,503)     |               -

          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


                          A.  CORPORATE STRUCTURE AND CONTROL

     Prior to May 1, 1995,  Transcontinental Gas Pipe Line Corporation (Transco)
was  a  wholly-owned   subsidiary  of  Transco  Gas  Company  (TGC).  TGC  is  a
wholly-owned subsidiary of Transco Energy Company (TEC).

     As  discussed  in Transco's  1995 Annual  Report on Form 10-K,  TEC and The
Williams  Companies,  Inc.  (Williams)  entered into a merger agreement (Merger)
pursuant to which Williams  acquired TEC and its wholly-owned  subsidiaries.  On
the May 1, 1995 effective date of the Merger, TEC declared and paid as dividends
to Williams all of TEC's interests in Transco.

                               B.  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 financial  statements and the notes thereto  included in Transco's 1995
Annual  Report on Form 10-K and  included  in  Transco's  1996  First and Second
Quarter Reports on Form 10-Q.

     The acquisition of TEC and its subsidiaries, including Transco, by Williams
has been accounted for using the purchase method of accounting.  Accordingly, an
allocation of the purchase  price was assigned to the assets and  liabilities of
Transco based on their estimated fair values. The accompanying  post-acquisition
condensed  consolidated  financial  statements  reflect  Transco's  share of the
purchase price. The purchase price allocation to Transco primarily  consisted of
a $1.5 billion  allocation  to  property,  plant and  equipment,  which is being
amortized on a straight-line basis, and adjustments to deferred taxes based upon
the book  basis of the net  assets  recorded  as a  result  of the  acquisition.
Current  Federal  Energy  Regulatory  Commission  (FERC)  policy does not permit
Transco to recover through rates amounts in excess of original cost.

     Further,  as a result of the change in  control  of Transco on January  18,
1995  and  the  effects  of the  allocation  of the  purchase  price,  Transco's
Condensed Consolidated

                                           8

<PAGE>



Statement of Income and Condensed  Consolidated  Statement of Cash Flows for the
nine months ended September 30, 1995 have been segregated into a pre-acquisition
period ending January 17, 1995 and a  post-acquisition  period beginning January
18, 1995.

     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 1995 financial statements
to conform to the 1996 presentation.

                       C.  CONTINGENT LIABILITIES AND COMMITMENTS

     There have been no new developments  from those described in Transco's 1995
Annual Report on Form 10-K or 1996 First and Second Quarter Reports on Form 10-Q
other than as described below.

Rate and Regulatory Matters

     General rate case (Docket No. RP97-71)

     On  November 1, 1996,  Transco  submitted  to the 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 general  rate filing  proposes an
annual cost of service  increase of  approximately  $67 million over the cost of
service  underlying the rates  contained in the pending  settlement of Transco's
last  general rate filing.  The rates,  which are expected to become  effective,
subject  to refund,  on May 1, 1997  (assuming  a  five-month  suspension),  are
designed using the straight fixed-variable rate design method.

     The filing also  includes (1) a pro-forma  proposal to roll-in the costs of
Transco's  Leidy Line and  Southern  expansion  incremental  projects  and (2) a
pro-forma  proposal to make IT backhaul  rates equal to the forward  haul rates.
The pro-forma  proposals would be made effective  prospectively only after final
FERC approval.

     General rate case (Docket No. RP95-197)

     Transco,  FERC's staff and all active parties have agreed to settle many of
the issues originally  scheduled for hearing in Phase II of this proceeding.  On
June 19, 1996, an offer of settlement  encompassing all issues regarding cost of
service and throughput  (except rate of return and capital  structure which were
litigated in Phase I of this

                                           9

<PAGE>



proceeding),  as well as several cost  allocation  issues,  was submitted to the
Administrative Law Judge (ALJ) for certification to the FERC. 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 FERC's staff
either  supported the  settlement or did not oppose it. On July 31, 1996 the ALJ
certified the settlement to the FERC for its  consideration,  and on November 1,
1996, the FERC issued an order approving the settlement. The settlement will not
become  effective  until thirty days following the date the FERC's order becomes
final.  On July 15,  1996,  Transco  submitted  a filing  with the FERC in which
Transco proposed to implement,  for non-contesting parties, the settlement rates
set forth in the settlement. The July 15 filing was accepted effective August 1,
1996 and Transco began billing the settlement  rates to  non-contesting  parties
effective August 1, 1996.

     On October 9, 1996, Transco filed a Stipulation and Agreement with the ALJ,
which,  subject to the outcome of the litigation of the reserved issues in Phase
I and Phase II in this  proceeding,  settles  the issues of cost of service  and
throughput with the one party that opposed the resolution of those issues in the
June 19, 1996  settlement.  That party  continues to oppose other aspects of the
June 19, 1996 settlement.

     The  hearing  addressing  unsettled  issues in Phase II of this  proceeding
began on  October  23,  1996 and is  expected  to  conclude  about the middle of
November 1996.

     General rate case (Docket No. RP92-137)

     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.  Certain parties filed for
rehearing  of the April 10 order  and,  on July 23,  1996,  the FERC  denied the
rehearing  requests.  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 in the United
States  Court of Appeals for the District of Columbia  Circuit (D. C.  Circuit).
Those parties seek review of the FERC's April 10 and July 23, 1996 orders.

     Order 636

     On July 3,  1996,  the FERC  issued an order on review of an ALJ's  initial
decision concerning,  among other things, Transco's production area rate design.
The FERC  rejected  the ALJ's  recommendations  that  Transco  divide  its costs
between  its  production  area and market  area,  and permit  its  customers  to
renominate  their firm  entitlements.  The FERC also  concluded that Transco may
offer firm service on its supply  laterals  through an open season and eliminate
its IT feeder service in favor of an interruptible  service option that does not
afford shippers feeding firm transportation on Transco's production

                                           10

<PAGE>



area  mainline  a  priority  over other  interruptible  transportation.  Certain
parties have sought rehearing of the FERC's July 3, 1996 Order.

     On July 16, 1996, the D.C. Circuit issued a decision which in part affirmed
and in part remanded Order 636.  However,  the court stated that Order 636 would
remain in effect until the FERC issued a final order on remand after considering
the remanded issues. With the issuance of this decision, the stay on the appeals
of individual pipeline's restructuring cases has been lifted.

     Gathering facilities spin-down order (Docket Nos. CP96-206-000 and CP96-
       207-000)

     On  September  25,  1996,  the FERC  issued an order  dismissing  Transco's
application  and Williams Gas Processing - Gulf Coast  Company's  (WGP) petition
for declaratory order filed by Transco and WGP to spin down certain of Transco's
production area facilities.  On October 25, 1996,  Transco and WGP filed a joint
request for rehearing of the FERC's September 25 order.

     Order No. 94-A costs (Docket No. RP92-149)

     Transco billed to and recovered from Columbia Gas Transmission  Corporation
(Columbia)  approximately  $7  million  of Order 94-A  costs.  In October  1993,
Transco and Columbia filed with the FERC for approval of a settlement  agreement
in which  Transco  agreed to refund $1.4  million to  Columbia.  On February 13,
1995,  the FERC  issued an order  rejecting  the  October  1993  settlement  and
requiring  Transco  to refund to  Columbia  the $7  million  of Order 94-A costs
collected from Columbia.  On May 31, 1995,  Transco made the required refund for
which Transco had previously  provided a reserve.  On June 30, 1995, Transco and
Columbia  each filed with the D. C.  Circuit a petition for review of the FERC's
order. On September 10, 1996, the D.C. Circuit issued an opinion,  which vacated
the FERC's  February 13 order and directed the FERC to issue an order  approving
the October 1993 Transco-Columbia settlement. The effects of the D. C. Circuit's
opinion have not been included in the accompanying  financial statements pending
further review of the issue and the opinion.

Legal Proceedings

     Dakota Gasification litigation

     Pursuant to the FERC's order of July 17,  1996,  oral  argument  before the
FERC occurred on September 25, 1996.

     Royalty claims and litigation

     The  Marathon  litigation  has been settled by cash  payments.  Transco had
previously  established  a reserve that covered,  among other things,  potential
liability for this litigation.


                                           11

<PAGE>



     The trial of the Texaco lawsuit has been rescheduled for July, 1997.

     Some producers that have indemnification arrangements with Transco covering
certain types of royalty claims have received  additional  claims for royalties.
Some of these claims may be covered by such indemnification.

     Other litigation

     On July 18,  1996,  an  individual  filed a lawsuit  in the  United  States
District Court for the District of Columbia against 70 natural gas pipelines and
other gas purchasers or former gas  purchasers.  Transco is named as a defendant
in the lawsuit.  The plaintiff  claims, on behalf of the United States under the
False Claims Act, that the pipelines have incorrectly measured the heating value
or volume of gas  purchased by the  defendants.  The  plaintiff  claims that the
United States has lost royalty payments as a result of these practices.  Transco
intends to vigorously defend against these claims.

Summary

     While  no  assurances  may be  given,  Transco  does not  believe  that the
ultimate  resolution  of the  foregoing  matters,  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.

                           D.  DEBT AND FINANCING ARRANGEMENTS

Long-term Debt

     Williams and certain of its subsidiaries, including Transco, are parties to
an $800 million credit  agreement  (Credit  Agreement),  under which Transco can
borrow up to $400 million.  Interest rates vary with current market  conditions.
As of  September  30, 1996,  Transco had no  outstanding  borrowings  under this
agreement.

     On  July  15,  1996,   Transco  issued  $200  million  of  debentures  (the
"Debentures"),  which pay  interest at 7.08% per annum on January 15 and July 15
of each year,  beginning  January 15, 1997.  The  Debentures  mature on July 15,
2026,  but are  subject  to  redemption,  at any time after  July 15,  2001,  at
Transco's option, in whole or part, at a specified  redemption price. The holder
of each  Debenture may elect between May 15, 2001 and June 15, 2001 to have such
Debenture  repaid  on  July  15,  2001  at 100%  of the  principal  amount.  The
Debentures have no sinking fund provisions.

     For financial statement  reporting  purposes,  $249 million of current debt
obligations have been classified as non-current  obligations  based on Transco's
intent and ability to refinance on a long-term  basis.  The amount  available on
the  Credit   Agreement  of  $400  million  is  sufficient  to  complete   these
refinancings.


                                          12

<PAGE>



Short-term Debt

     In October 1996,  Transco  reinstated  one of its  short-term  money market
facilities,  which increased the amount Transco can borrow under such facilities
to an  aggregate of $135  million  from $95  million.  Interest  rates under the
reinstated  facility vary with current  market  conditions.  As of September 30,
1996, Transco had no outstanding borrowings under these facilities.

Sale of Receivables

     In May 1996,  Transco  extended  its one year  agreement  pursuant to which
Transco can sell to an investor up to $100  million of  undivided  interests  in
certain  of its trade  receivables.  During the third  quarter of 1996,  Transco
reduced  the  capital  level for its sale of trade  receivables  program  to $79
million due to a seasonal reduction in commodity revenues.


                                          13

<PAGE>



ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
           of Operations.

     The following  discussion  should be read in conjunction with the financial
statements,  notes and  management's  discussion  contained  in Items 7 and 8 of
Transco's 1995 Annual Report on Form 10-K and in Transco's 1996 First and Second
Quarter  Reports on Form 10-Q and with the condensed  financial  statements  and
notes contained in this report.

                            CAPITAL RESOURCES AND LIQUIDITY

Method of Financing

     Transco  funds its  capital  requirements  with cash flows  from  operating
activities,  including  the  sale of  trade  receivables,  repayments  of  funds
advanced to Williams, borrowings under the Credit Agreement and short-term money
market  facilities  and, if required,  advances from  Williams.  In late 1996 or
early 1997,  Transco also expects to access capital markets to refinance current
maturities of existing long-term debt.

     As discussed in Note D of the Notes to the Condensed Consolidated Financial
Statements,  during July 1996, Transco issued $200 million of Debentures and, in
October 1996, increased the amount Transco can borrow under its short-term money
market facilities.  Proceeds from the Debentures were used for general corporate
purposes,  including repayment of amounts outstanding under the Credit Agreement
that were  borrowed in May 1996 to redeem $125 million of  Transco's  adjustable
rate notes.

     At September 30, 1996 there were no outstanding borrowings under the Credit
Agreement or the  short-term  money market  facilities.  Advances due Transco by
Williams totaled $81 million.

     For financial statement  reporting  purposes,  $249 million of current debt
obligations have been classified as non-current  obligations  based on Transco's
intent and ability to refinance on a long-term  basis.  The amount  available on
the  Credit   Agreement  of  $400  million  is  sufficient  to  complete   these
refinancings.

     Due to a seasonal  reduction in  commodity  revenues,  Transco  reduced the
capital level for its sale of trade receivables program from $100 million to $79
million during the third quarter of 1996.  Transco  expects the capital level to
increase  during  the  fourth  quarter  of 1996 with the  increase  in  seasonal
commodity revenues.

Capital Expenditures

     As shown in the table below,  Transco's capital expenditures,  for the nine
months ended  September 30, 1996 were $166.2  million,  compared to $193 million
for the nine months  ended  September  30,  1995.  The lower  expenditures  were
primarily due to a decrease in expenditures for the 1995/96 Southeast  Expansion
Project. Phase I of the

                                          14

<PAGE>



project was placed in service in late 1995 and Phase II is expected to be placed
in service in November 1996.


<TABLE>
<CAPTION>

                                                              Nine Months
                                                           Ended September 30,
                                                          ----------------------
Capital Expenditures                                        1996          1995
--------------------                                      --------      --------
                                                             (In Millions)
<S>                                                       <C>           <C>
Market-Area Projects                                      $   26.2      $   54.6
Maintenance of Existing Facilities and Other Projects        140.0         138.4
                                                          --------      --------
Total Capital Expenditures                                $  166.2      $  193.0
                                                          ========      ========
</TABLE>



     Mobile Bay Lateral Expansion Project On November 12, 1996, Transco filed an
application  with the FERC for  approval  to extend  and  expand  its Mobile Bay
lateral, increasing capacity as much as 600 million cubic feet per day (MMcf/d).
The project will include  expansion of Transco's  existing  123-mile  Mobile Bay
lateral and construction of a new 77-mile offshore pipeline extension to an area
near the outer continental shelf where substantial reserves have been discovered
by  several  producers.  The  project,  which  has an  estimated  cost of $171.5
million, is targeted to be in service during the 1998-99 winter heating season.

     Southeast  Louisiana  Gathering System Project On August 30, 1996,  Transco
filed an application  with the FERC for authority to expand the offshore portion
of its existing Southeast  Louisiana Gathering System in two phases to provide a
total of 660 MMcf/d of additional firm  transportation  capacity.  The estimated
cost of the project is $129 million.

Other Capital Requirements and Contingencies

     Transco's capital  requirements and contingencies are discussed in its 1995
Annual  Report on Form  10-K.  Other  than  described  in Note C of the Notes to
Condensed  Consolidated  Financial Statements in Transco's 1996 First and Second
Quarter  Reports  on  Form  10-Q  and in this  report,  there  have  been no new
developments  from those  described in Transco's 1995 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.  When necessary, Transco also expects to be able to access
public and private markets to finance its capital requirements.


                                          15

<PAGE>



                                 RESULTS OF OPERATIONS

     As a result of the change in control of Transco on January 18, 1995 and the
effects  of  the  allocation  of  the  purchase   price,   Transco's   Condensed
Consolidated  Statement of Income for the nine months ended  September  30, 1995
has been segregated into a pre-acquisition  period ending January 17, 1995 and a
post-acquisition  period  beginning  January  18,  1995.  For  purposes  of  the
discussion of variances between the nine months ended September 30, 1996 and the
nine months ended September 30, 1995, the pre-acquisition  and  post-acquisition
periods for the nine months ended  September  30, 1995 have been  combined for a
pro forma  presentation  of results of  operations  for the first nine months of
1995.

Common Stock Equity in Net Income and Operating Income

     Transco's  common  stock  equity in net  income for the nine  months  ended
September 30, 1996 was $63.7  million,  compared with common stock equity in net
income of $50.9  million for the nine  months  ended  September  30,  1995.  The
results for the nine months ended September 30, 1995 include an after-tax charge
of $15.3 million, to provide for executive  severance and termination  benefits,
substantially  all of which were not deductible for federal income tax purposes.
Excluding this charge,  Transco's common stock equity in net income for the nine
months ended September 30, 1995 would have been $66.2 million.

     Excluding the 1995 charge for executive severance and termination benefits,
the lower  common stock equity in net income of $2.5 million for the nine months
ended  September 30, 1996 was primarily due to slightly lower  revenues,  net of
the related cost of sales and  transportation,  and higher net interest expense,
partly offset by lower dividends on preferred stock.  Operating income of $144.7
million for the nine months ended September 30, 1996 was comparable to operating
income of $145.9  million  (excluding  the pre-tax  charge of $16.0  million for
executive  severance  and  termination  benefits)  for  the  nine  months  ended
September 30, 1995.

     Because of its rate structure and historical maintenance schedule,  Transco
typically experiences lower operating profit in the second and third quarters as
compared to the first and fourth quarters of the year.

Operating Expenses

     Excluding  the pre-tax  effects of the charge for  executive  severance and
termination  benefits in 1995 and the cost of sales and transportation of $658.8
million for the nine months ended  September 30, 1996 and $518.3 million for the
comparable  period in 1995,  Transco's  operating  expenses  for the nine months
ended  September 30, 1996,  were  comparable to operating  expenses for 1995. An
increase in depreciation and amortization was offset by lower administrative and
general expenses.  The increase in depreciation and amortization of $6.7 million
was primarily due to an increase of $3.8 million in the  amortization of amounts
allocated to Transco's property, plant and equipment from the

                                          16

<PAGE>



Williams  purchase  price  and an  increase  of $2.9  million  in the  regulated
depreciation  expense  resulting  from  an  increase  in  property,   plant  and
equipment. Administrative and general expenses decreased $7.3 million, primarily
due to a  decrease  in office  building  rent,  reflecting  the  effects  of the
Williams acquisition, and lower information services and processing costs.

Transportation Services

     Transco's operating revenues related to its transportation services for the
nine months ended September 30, 1996 were $495 million, compared to $521 million
for the nine months ended  September 30, 1995. The lower revenues were primarily
due to lower gas  transportation  costs  charged to  Transco by others  that are
recovered in Transco's  rates,  slightly  offset by the benefits of phase one of
the 1995/1996 Southeast Expansion Project placed in service in late 1995.

     As shown in the table below, Transco's total market-area deliveries for the
nine months ended  September 30, 1996  increased 47.5 TBtu, or 5%, when compared
to the same period in 1995.  The increased  deliveries  were mainly due to phase
one of the 1995/1996  Southeast  Expansion  Project being placed into service in
late 1995 and prolonged cold weather in the market area during the first quarter
of 1996.

     The  production-area  deliveries  for the nine months ended  September  30,
1996, increased 37.6 TBtu, or 30%, when compared to the same period in 1995. The
increased  deliveries were due primarily to gas being  transported for injection
into storage and prolonged cold weather during the first quarter of 1996.

     As a result of a straight fixed-variable (SFV) rate design, the increase in
total system deliveries had no significant impact on operating income.

<TABLE>
<CAPTION>

                                                                       Nine Months
                                                                    Ended September 30,
                                                                   ---------------------
Transco System Deliveries (TBtu)                                     1996        1995
                                                                     ----        ----
<S>                                                                 <C>         <C>
Market-area deliveries:
    Long-haul transportation                                          699.9       618.8
    Market-area transportation                                        304.9       338.5
                                                                    -------     -------
        Total market-area deliveries                                1,004.8       957.3
Production-area transportation                                        163.0       125.4
                                                                    -------     -------
Total system deliveries                                             1,167.8     1,082.7
                                                                    =======     =======


Average Daily Transportation Volumes (TBtu)                             4.3         4.0
Average Daily Firm Reserved Capacity (TBtu)                             5.1         5.2
</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.

                                          17

<PAGE>



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 C of the Notes to Condensed Consolidated Financial Statements for a
discussion of 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, 1996
related to its sales  services  increased  $173  million to $595  million,  when
compared to the same period in 1995.  The increase was  primarily  due to higher
gas prices in Transco's  jurisdictional merchant sales services partly offset by
lower volumes of gas sales.  However, this increase in revenues had no effect on
Transco's  operating  or net income  variances  when  compared to the prior year
since the  increase in revenues  was offset by a  corresponding  increase in the
cost of sales.

<TABLE>
<CAPTION>

                                                              Nine Months
                                                          Ended September 30,
                                                          -------------------
Gas Sales Volumes (TBtu)                                    1996       1995
------------------------                                    ----       ----
<S>                                                        <C>        <C>
Long-term sales                                            167.5      154.1
Short-term sales                                            33.6       70.4
                                                           -----      -----
    Total gas sales                                        201.1      224.5
                                                           =====      =====
</TABLE>



Storage Services

    Transco's  operating  revenues for the nine months ended  September 30, 1996
related to its storage  services  decreased  $8.4 million,  when compared to the
nine  months  ended   September   30,  1995.   The  decrease  in  revenues  were
substantially  offset by a corresponding  decrease in underground  storage costs
included in operation and maintenance expenses.

                                          18

<PAGE>



                               PART II - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS.

          See  discussion  of  legal  proceedings  in  Note  C 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 13, 1996              By /s/ Nick A. Bacile
                                      ----------------------------------
                                      Nick A. Bacile
                                      Vice President and Controller
                                      (Principal Financial Officer)












                                          20