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 MARCH 31, 1999

                                       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 MARCH 31, 1999 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.


<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  1998 Annual Report on Form 10-K.  The  accompanying
condensed consolidated 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 March 31, 1999,  and results of operations and cash flows
for the three months ended March 31, 1999 and 1998.

     Certain matters discussed in this report, excluding historical information,
include   forward-looking    statements.    Although   Transco   believes   such
forward-looking statements are based on reasonable assumptions, no assurance can
be given that every  objective  will be achieved.  Such  statements  are made in
reliance on the "safe harbor" protections  provided under the Private Securities
Reform  Act of 1995.  Additional  information  about  issues  that could lead to
material  changes in performance is contained in Transco's 1998 Annual Report on
Form 10-K and the Year 2000 disclosure contained in this document.





<PAGE>



                   TRANSCONTINENTAL GAS PIPE LINE CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEET
                             (Thousands of Dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                   March 31,              December 31,
                                                                                      1999                    1998
                                                                                -----------------       -----------------

         ASSETS
<S>                                                                               <C>                     <C>
Current Assets:
     Cash                                                                         $      1,039            $       1,470
     Receivables:
         Affiliates                                                                      2,153                   10,892
         Others                                                                         27,004                   21,689
     Advances to affiliates                                                            352,412                  416,164
     Transportation and exchange gas receivables:
         Affiliates                                                                        576                    1,370
         Others                                                                         35,191                   56,475
     Inventories                                                                        73,893                   79,787
     Deferred income taxes                                                             102,650                   99,598
     Other                                                                              23,018                   16,714
                                                                                -----------------       -----------------
         Total current assets                                                          617,936                  704,159
                                                                                -----------------       -----------------

Investments, at cost plus equity in undistributed earnings                              30,112                    8,915
                                                                                -----------------       -----------------

Property, Plant and Equipment :
     Natural gas transmission plant                                                  4,221,137                4,259,502
     Less-Accumulated depreciation and amortization                                    595,503                  616,120
                                                                                -----------------       -----------------
         Total property, plant and equipment, net                                    3,625,634                3,643,382
                                                                                -----------------       -----------------

Other Assets                                                                           178,741                  168,495
                                                                                -----------------       -----------------

                                                                                  $  4,452,423            $   4,524,951
                                                                                =================       =================


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





<PAGE>



                   TRANSCONTINENTAL GAS PIPE LINE CORPORATION

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

                                                                                   March 31,            December 31,
                                                                                     1999                   1998
                                                                                ----------------       ----------------

            LIABILITIES AND STOCKHOLDER'S EQUITY
<S>                                                                              <C>                    <C>
Current Liabilities:
        Payables:
            Affiliates                                                           $     37,108           $     25,050
            Others                                                                     81,759                 72,285  
        Transportation and exchange gas payables:
            Affiliates                                                                    379                    379
            Others                                                                      7,643                  8,354
        Accrued liabilities                                                           116,746                156,631
        Reserve for rate refunds                                                      161,675                238,403
                                                                                ----------------       ----------------
            Total current liabilities                                                 405,310                501,102
                                                                                ----------------       ----------------

Long-Term Debt, less current maturities                                               975,662                975,768
                                                                                ----------------       ----------------

Other Long-Term Liabilities:
        Deferred income taxes                                                         848,298                846,306
        Other                                                                         125,970                139,734
                                                                                ----------------       ----------------
            Total other long-term liabilities                                         974,268                986,040
                                                                                ----------------       ----------------

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                                                             444,753                409,611
                                                                                ----------------       ----------------
            Total common stockholder's equity                                       2,097,183              2,062,041
                                                                                ----------------       ----------------

                                                                                 $  4,452,423           $  4,524,951
                                                                                ================       ================


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



<PAGE>



                   TRANSCONTINENTAL GAS PIPE LINE CORPORATION

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

                                                                                       Three Months Ended
                                                                                            March 31
                                                                             ----------------------------------------
                                                                                   1999                   1998
                                                                             -----------------      -----------------
<S>                                                                          <C>                    <C>
Operating Revenues:
   Natural gas sales                                                         $     148,071          $     132,720
   Natural gas transportation                                                      168,061                164,869
   Natural gas storage                                                              35,002                 38,132
   Other                                                                             3,088                  3,646
                                                                             -----------------      -----------------
        Total operating revenues                                                   354,222                339,367
                                                                             -----------------      -----------------

Operating Costs and Expenses:
   Cost of natural gas sales                                                       148,071                132,720
   Cost of natural gas transportation                                               10,984                 10,194
   Operation and maintenance                                                        41,533                 44,394
   Administrative and general                                                       34,631                 29,993
   Depreciation and amortization                                                    40,213                 40,627
   Taxes - other than income taxes                                                   7,848                  9,073
   Other                                                                             1,016                    415
                                                                             -----------------      -----------------
        Total operating costs and expenses                                         284,296                267,416
                                                                             -----------------      -----------------

Operating Income                                                                    69,926                 71,951
                                                                             -----------------      -----------------

Other (Income) and Other Deductions:
   Interest expense                                                                 18,052                 22,605
   Interest income - affiliates                                                     (5,732)                (6,598)
   Allowance for equity and borrowed funds used during construction (AFUDC)           (855)                (2,019)
   Miscellaneous other deductions, net                                                 840                    582
                                                                             -----------------      -----------------
        Total other deductions                                                      12,305                 14,570
                                                                             -----------------      -----------------

Income before Income Taxes                                                          57,621                 57,381

Provision for Income Taxes                                                          22,479                 21,791
                                                                             -----------------      -----------------

Net Income                                                                   $      35,142          $      35,590
                                                                             =================      =================


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




<PAGE>


                   TRANSCONTINENTAL GAS PIPE LINE CORPORATION

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                             (Thousands of Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                Three Months Ended
                                                                                                     March 31
                                                                                         ---------------------------------
                                                                                             1999                1998
                                                                                         -------------       -------------
<S>                                                                                      <C>                 <C>
Cash flows from operating activities:

          Net income                                                                     $   35,142          $   35,590
          Adjustments to reconcile  net income to net cash provided by (used in)
            operating activities:
              Depreciation and amortization                                                  41,332              42,147
              Deferred income taxes                                                          (1,060)             18,729
              Allowance for equity funds used during construction (AFUDC)                      (602)             (1,460)
              Changes in operating assets and liabilities:
                 Receivables                                                                  2,570               8,445
                 Receivables sold                                                             2,000              (7,000)
                 Transportation and exchange gas receivables                                 22,078                (184)
                 Inventories                                                                  5,894              16,647
                 Payables                                                                    27,393             (25,974)
                 Transportation and exchange gas payables                                      (711)             (2,026)
                 Accrued liabilities                                                        (39,453)            (31,944)
                 Reserve for rate refunds                                                   (76,728)             32,675
                 Other, net                                                                 (32,095)            (22,971)
                                                                                         -------------       -------------
                       Net cash provided by (used in)  operating activities                 (14,240)             62,674
                                                                                         -------------       -------------

Cash flows from financing activities:
          Additions to long-term debt                                                            -              298,343
          Retirement of long-term debt                                                           -             (160,000)
          Debt issue costs                                                                       -               (2,060)
          Dividends on common stock                                                              -                   -
                                                                                         -------------       -------------
                       Net cash provided by financing activities                                 -              136,283
                                                                                         -------------       -------------

Cash flows from investing activities:
          Property, plant and equipment:
              Additions, net of equity AFUDC                                                (25,093)            (42,928)
              Changes in accounts payable                                                    (5,861)             (6,825)
          Advances to affiliates, net                                                        63,752            (151,031)
          Other, net                                                                        (18,989)              1,935
                                                                                         -------------       -------------
                       Net cash provided by (used in) investing activities                   13,809            (198,849)
                                                                                         -------------       -------------

Net increase (decrease) in cash                                                                (431)                108
Cash at beginning of period                                                                   1,470               1,321
                                                                                         -------------       -------------
Cash at end of period                                                                    $    1,039          $    1,429
                                                                                         =============       =============

Supplemental disclosures of cash flow information:
          Cash paid during the year for :
              Interest (exclusive of amount capitalized)                                 $  42,385           $   15,999
              Income taxes paid                                                             17,551               18,859

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


<PAGE>




                   TRANSCONTINENTAL GAS PIPE LINE CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                       1. CORPORATE STRUCTURE AND CONTROL

      Transcontinental Gas Pipe Line Corporation (Transco) is a wholly-owned
subsidiary of Williams Gas Pipeline Company (WGP).  WGP is a wholly-owned 
subsidiary of The Williams Companies, Inc. (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.  Equity in  earnings  and  losses of
unconsolidated affiliates is included in other operating revenues.

      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 1998 Annual Report on Form 10-K.

      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.

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

      Certain  reclassifications  have been made in the 1998  financial
statements to conform to the 1999 presentation.

<PAGE>

                    3. CONTINGENT LIABILITIES AND COMMITMENTS

      There have been no new developments from those described in Transco's 1998
Annual Report on Form 10-K other than as described below.

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.

      The filing also included (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  interruptible  transportation  (IT) backhaul  rates
equal to the IT  forward  haul  rates.  The  pro-forma  proposals  would be made
effective prospectively only after final FERC approval.

      On November 29, 1996, the FERC issued an order accepting Transco's filing,
suspending  its  effectiveness  until May 2, 1997 and  establishing a hearing to
examine the reasonableness of Transco's  proposed rates. In addition,  the order
consolidated  Transco's  pro-forma roll-in proposal with the Phase II hearing in
Docket  No.  RP95-197,  and  directed  that the  record  in that  proceeding  be
supplemented  to the extent  necessary.  On February 3, 1997, the FERC issued an
order on rehearing of its  November  29, 1996 order which,  among other  things,
revised the effective date for the proposed rates to May 1, 1997.

      On January  20,  1998,  Transco  filed a  Stipulation  and  Agreement  for
approval by the FERC, documenting a settlement with all of the active parties in
this  proceeding.  The settlement  resolves all cost of service,  throughput and
other issues in this proceeding,  except rate of return,  capital  structure and
certain minor cost allocation and rate design issues. On June 12, 1998, the FERC
issued an order  approving the settlement.  On October 30, 1998,  Transco issued
refunds in  connection  with the  settlement  in the  amount of $ 89.5  million,
including  interest,  for which Transco had previously  provided a reserve.  The
issues not resolved by the  settlement  were  litigated by the parties  before a
FERC  Administrative  Law Judge  (ALJ).  On March 30,  1999,  the ALJ issued her
initial  decision  which  is  consistent  with the rate of  return  and  capital
structure policies FERC announced in RP95-197 (see discussion  below).  Applying
these  policies,  the ALJ  recommended  utilization  of  Transco's  own  capital
structure,  consisting  of 60.2% equity,  and a return on equity of 12.40%.  The
ALJ's decision is subject to FERC review. Transco believes the remaining reserve
is adequate for any additional refunds that may be required and has not made any
adjustments to its reserve pending FERC review.


<PAGE>


      GENERAL RATE CASE (DOCKET NO.  RP95-197) On July 29, 1998, the FERC issued
an order on  rehearing  of its  August 1, 1997  order in the Phase I  proceeding
determining the capital structure and rate of return for Transco.  As to capital
structure,  the FERC vacated its policy  formulated  in the August 1, 1997 order
which  favored use of the  pipeline's  own capital  structure if the  pipeline's
equity ratio falls within the range of the equity ratios of the proxy  companies
used to determine the pipeline's  return on equity.  In the July 29, 1998 order,
the FERC returned to its  traditional  policy,  under which the  pipeline's  own
capital  structure  will be used if the pipeline  issues its own  non-guaranteed
debt  and has  its own  bond  rating,  and if the  pipeline's  equity  ratio  is
reasonable  when  compared  to the equity  ratios  approved by the FERC in other
proceedings and when compared to those of the proxy companies.  Applying its new
policy, the FERC affirmed the use of Transco's own capital structure, consisting
of 57.58% equity, in developing Transco's rate of return in this proceeding.  As
discussed in greater detail below,  the FERC also modified its  methodology  for
determining  return on equity.  Applying its revised  methodology  to Transco in
this  proceeding,  the FERC  approved a rate of return on equity for  Transco of
12.49%.  A joint request for rehearing of the July 29, 1998 order was filed with
the FERC and,  on December 1, 1998,  the FERC denied  rehearing.  On January 29,
1999,  most of the same  parties  that were  involved  in the joint  request for
rehearing  filed a notice of appeal with the United  States Court of Appeals for
the District of Columbia. Transco made refunds on March 1, 1999 of approximately
$96.0 million,  including interest,  under Docket No. RP95-197 for which Transco
had previously  provided a reserve.  Transco  believes the remaining  reserve is
adequate  for any  additional  refunds that may be required and has not made any
adjustments to its reserve pending further analysis of the court appeal.

      The hearing  concerning  the Phase II issues not  resolved by the June 19,
1996 and October 9, 1996  agreements  concluded in November 1996. A supplemental
hearing to consider  Transco's roll-in proposal filed in Docket No. RP97-71,  as
discussed  above,  was completed in June 1997. On March 24, 1998, the ALJ in the
Phase II hearings issued an initial decision.  As to the main issue addressed in
the decision,  rolled-in  pricing,  the ALJ  determined  that the  proponents of
roll-in,  including  Transco,  must  satisfy the burden  under  Section 5 of the
Natural  Gas  Act and  demonstrate  that  Transco's  existing  incremental  rate
treatment  is unjust  and  unreasonable  and that the  proposed  rolled-in  rate
treatment is just and reasonable.  The ALJ ruled that neither Transco nor any of
the other roll-in  proponents  had satisfied  that burden and,  therefore,  that
Transco's  existing  incremental rate treatment must remain in effect.  On April
16, 1999, the FERC issued an order reversing the ALJ,  concluding that Transco's
proposal  did not have to meet the  Section  5 burden  discussed  above and that
under the appropriate  standard,  Section 4, Transco had  demonstrated  that its
proposal  was just and  reasonable.  As a result,  the FERC  remanded to the ALJ
issues regarding the implementation of Transco's roll-in proposal.


<PAGE>

      RATE OF RETURN  CALCULATION  As noted above,  on August 1, 1997,  the FERC
issued an order  addressing,  among other things,  the authorized rate of return
for  Transco's  1995 rate case (Docket No.  RP95-197).  In that 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 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.  On January 30, 1998,  the FERC  convened a public
conference to explore, among other things,  possible modifications to the FERC's
rate of return  methodology.  As discussed  above, in its July 29, 1998 order on
rehearing  of its August 1, 1997  order,  the FERC  modified  its rate of return
methodology  with  regard  to the  weight  to be given to the  long-term  growth
component.  Under its  previous  methodology,  the FERC  averaged  the short and
long-term growth projections,  thereby giving them equal weight. In its July 29,
1998  order,  the FERC  changed  its  policy  and  will  accord  the  short-term
projection  a  two-thirds  weighting  and the  long-term  projection a one-third
weighting.  The  FERC has  determined  that the  short-term  projection  is more
reliable  and should be given more  weight,  but that the  long-term  projection
should be given some weight in order to normalize  any  distortions  that may be
reflected in the short-term  data. The revised  weighting to be reflected in the
FERC's methodology should lead to somewhat higher rates of return on equity than
were obtained  under the previous  methodology.  In addition,  the FERC will now
permit parties to argue that a pipeline's return on equity be established at any
point  within the range of returns  developed  under the  two-stage  methodology
(rather  than only at the  high,  mid or low  point in the  range)  based on the
pipeline's  relative level of risk. In that regard,  when assessing a pipeline's
relative risk, the FERC determined that it will not lower a pipeline's return on
equity if its lower risk is the result of the  pipeline's  own  efficiency,  but
will focus on risks faced by the pipeline that are attributable to circumstances
outside the control of the pipeline's management.

      PRODUCTION AREA RATE DESIGN (DOCKET NOS. RP92-137,  RP93-136 AND RP98-381)
Transco has  expressed to the FERC concerns that  inconsistent  treatment  under
Order 636 of Transco and its competitor pipelines with regard to rate design and
cost  allocation  issues in the production  area may result in rates which could
make Transco less competitive,  both in terms of  production-area  and long-haul
transportation.  A hearing  before an ALJ (Docket Nos.  RP92-137 and  RP93-136),
dealing  with,  among  other  things,  Transco's  production-area  rate  design,
concluded  in June 1994.  On July 19, 1995,  the ALJ issued an initial  decision
finding that Transco's  proposed  production area rate design,  and its existing
use of a system  wide cost of service  and  allocation  of firm  capacity in the
production area are unjust and unreasonable.  The ALJ therefore recommended that
Transco divide its costs between its production area and market area, and permit
its customers to renominate their firm entitlements.

<PAGE>

      On July 3, 1996,  the FERC issued an order on review of the 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  area
mainline a priority  over other  interruptible  transportation.  On December 18,
1996,  the FERC denied  rehearing  of its July 3, 1996 Order.  Several  parties,
including Transco,  have filed petitions for review in the D.C. Circuit Court of
the FERC's orders addressing  production area rate design issues. On November 4,
1998, the D.C.  Circuit Court issued an order granting the FERC's motion to hold
these appeals in abeyance  pending the outcome of the  proceedings  in Transco's
Docket No. RP98-381 (see below).

      On August 31,  1998,  Transco made a limited NGA Section 4 filing with the
FERC to  implement  firm  transportation  service on Transco's  production  area
supply  laterals in accordance  with the option  authorized by the FERC's July 3
and December 18, 1996 orders.  The filing  (Docket No.  RP98-381) was protested,
and on  September  30, 1998,  the FERC  accepted  the filing and  suspended  its
effectiveness until March 1, 1999, subject to further  proceedings.  On February
24, 1999, the FERC issued an order rejecting the filing,  finding that Transco's
proposal,  as filed,  conflicts with certain FERC  policies.  The FERC indicated
that Transco could pursue implementation of firm service on Transco's production
area  supply  laterals  to the extent the  service is  structured  in a way that
conforms with those policies.  Transco has sought  rehearing of the February 24,
1999 order.

      TILDEN/MCMULLEN  FACILITIES SPIN-DOWN PROCEEDING (DOCKET NOS. CP98-236 AND
242) In  February  1998,  Transco  filed an  application  with the FERC  seeking
authorization  to abandon  Transco's  onshore  Tilden/McMullen  Gathering System
located in Texas by conveyance  to Williams Gas  Processing - Gulf Coast Company
(Gas   Processing),   an  affiliate   of  Transco.   Gas   Processing   filed  a
contemporaneous  request that the FERC declare that the facilities  sought to be
abandoned  would  be  considered  nonjurisdictional  gathering  facilities  upon
transfer to Gas  Processing.  In May 1999,  the FERC issued an order in which it
determined  that certain of the facilities  would be gathering  facilities  upon
transfer to Gas Processing,  i.e., 1) those facilities upstream of and including
the Tilden Plant, 2) the South McMullen and Goebel Laterals  located  downstream
of the Tilden Plant, and 3) the small,  short laterals which branch out from the
McMullen  Lateral  downstream  of the Tilden  Plant at several  points along its
length.  However,  the FERC determined that the McMullen Lateral itself, as well
as two compressor stations, are jurisdictional  facilities, but authorized their
abandonment  subject to Gas Processing  obtaining a certificate to operate those
facilities.  The net  book  value  at  March  31,  1999  of the  Tilden/McMullen
facilities,   including  the  purchase   price   allocation   to  Transco,   was
approximately $68 million. Operating income for the year ended December 31, 1998
associated  with  those  facilities  is  estimated  to be less than $3  million;
however,  such operating income may not be  representative of the effects of the
spin-down on Transco's future operating income due to various factors, including
future regulatory actions.  Transco's abandonment authority is effective for one
year from the date of issuance of the order. Transco must notify the FERC of the
effective date of the  abandonment  within 10 days of the transfer.  Transco and
Gas  Processing  plan to file for  rehearing  of the  order  with  regard to the
facilities classified by the FERC as jurisdictional facilities.

<PAGE>

      REGULATION OF SHORT TERM NATURAL GAS  TRANSPORTATION  SERVICE  (DOCKET NO.
RM98-10-000) AND REGULATION OF INTERSTATE  NATURAL GAS  TRANSPORTATION  SERVICES
(DOCKET NO.  RM98-12-000) On July 29, 1998, the FERC issued a Notice of Proposed
Rulemaking  (NOPR) and a Notice of Inquiry  (NOI),  proposing  revisions to, and
seeking  comments  on,  its  regulatory  policies  for  interstate  natural  gas
transportation service. In the NOPR (Docket No. RM98-10-000),  the FERC proposes
revisions to its  regulations  to reflect  changes in the market for  short-term
transportation services on pipelines.  The FERC proposes to eliminate cost-based
regulation  of  short-term  transportation  services  and  implement  regulatory
policies  that  are  intended  to  maximize   competition   in  the   short-term
transportation  market,  mitigate  the  ability  of firms to  exercise  residual
monopoly  power  and  provide  opportunities  for  greater  flexibility  in  the
provision  of  pipeline  services.  Included  among  the  proposed  changes  are
initiatives to revise pipeline scheduling procedures, receipt and delivery point
policies,  and penalty  policies,  to require  pipelines  to auction  short-term
capacity,  to revise the FERC's reporting  requirements,  to permit pipelines to
negotiate rates and terms of service, and to revise certain rate and certificate
policies.  In the NOI (Docket No.  RM98-12-000),  the FERC seeks comments on its
pricing  policies in the existing  long-term market and pricing policies for new
capacity. The proposed changes are expected to have prospective effects only. On
April  22,  1999,  Williams  filed  comments  on the NOPR and NOI.  In  general,
Williams comments were supportive of the FERC's initiatives, particularly to the
extent that such initiatives  would result in a more  competitive,  market-based
environment.

LEGAL PROCEEDINGS

      OTHER LITIGATION In 1998, the United States Department of Justice informed
Williams  that Jack  Grynberg,  an  individual,  had filed  claims in the United
States  District  Court for the District of Colorado  under the False Claims Act
against  Williams  and  certain  of its  wholly  owned  subsidiaries,  including
Transco.  Mr.  Grynberg has also filed claims  against  approximately  300 other
energy  companies and alleges that the defendants  violated the False Claims Act
in connection  with the  measurement  and purchase of  hydrocarbons.  The relief
sought is an unspecified  amount of royalties  allegedly not paid to the federal
government,  treble  damages,  a civil penalty,  attorneys'  fees, and costs. On
April 9, 1999,  the United States  Department of Justice  announced  that it was
declining  to intervene  in any of the  Grynberg  qui tam cases;  including  the
action filed against the Williams  entities in the United States  District Court
for the District of Colorado.

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
1998 Annual  Report on Form 10-K,  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.



<PAGE>


                       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 if the funds available under the Credit Agreement have
not been borrowed by Williams or other  subsidiaries.  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 March 31, 1999,  Transco had no
outstanding borrowings under this agreement.

SHORT-TERM DEBT

      Transco is a party to a short-term  money market  facility  under which it
can borrow up to $40 million. Interest rates vary with current market conditions
based on the applicable bank rate at the time of the borrowings. As of March 31,
1999, Transco had no outstanding borrowings under these facilities.

SALE OF RECEIVABLES

      Transco  is a party to an  agreement  that  expires on  January  28,  2000
pursuant  to  which  Transco  can  sell to an  investor  up to $100  million  of
undivided  interest in certain of its trade  receivables.  At March 31, 1999 and
December 31, 1998,  interests in these receivables held by the investor were $89
million and $87 million, respectively.



<PAGE>



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  narrative analysis
contained in Items 7 and 8 of Transco's 1998 Annual Report on Form 10-K 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 three  months ended March 31, 1999 was $35.1
million compared to net income of $35.6 million for the three months ended March
31, 1998.  Operating  income for the three months ended March 31, 1999 was $69.9
million compared to $72.0 million for the three months ended March 31, 1998. The
lower  operating  income of $2.1 million was  primarily  the result of lower gas
storage revenues and higher administrative and general expense, partially offset
by lower  operation  and  maintenance  expense and lower taxes other than income
taxes.  The decrease in net income was  attributable to the decreased  operating
income, partially offset by lower interest expense.

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

TRANSPORTATION REVENUES

      Transco's  operating revenues related to its  transportation  services for
the three  months  ended  March 31,  1999 were $168  million,  compared  to $165
million for the three  months ended March 31,  1998.  The higher  transportation
revenues  were  primarily due to a higher level of  reimbursable  costs that are
included in operating expenses and recovered in Transco's rates.

      As shown in the table below,  Transco's total  market-area  deliveries for
the three months ended March 31, 1999  increased 25.1 trillion  British  Thermal
Units  (TBtu)  (6.5%) when  compared to the same period in 1998.  The  increased
deliveries  were  mainly due to higher  deliveries  under the Mobile Bay Lateral
Expansion  Project and the Cherokee  Expansion Project in the first three months
of  1999,  along  with  slightly  higher  long-haul  transportation  deliveries.
Transco's  production  area deliveries for the three months ended March 31, 1999
decreased  3.7 TBtu (7.6%) when  compared to the same period in 1998 as a result
of milder weather conditions.

<PAGE>

      As a result of a straight  fixed-variable (SFV) rate design,  increases or
decreases  in firm  transportation  volumes  in  comparable  facilities  have no
significant  impact  on  operating  income;   however,   because   interruptible
transportation  rates  have  components  of fixed and  variable  cost  recovery,
increases or decreases in interruptible transportation volumes do have an impact
on operating income.

                                                        Three Months
                                                       Ended March 31,
                                                   -------------------------

Transco System Deliveries (TBtu)                      1999           1998
--------------------------------                   ----------     ----------


Market-area deliveries:
     Long-haul transportation                         235.6          233.0
     Market-area transportation                       176.4          153.9
                                                   ----------     ----------
         Total market-area deliveries                 412.0          386.9
Production-area transportation                         44.7           48.4
                                                   ----------     ---------- 
         Total system deliveries                      456.7          435.3
                                                   ==========     ==========



Average Daily Transportation Volumes (TBtu)             5.1            4.8
Average Daily Firm Reserved Capacity (TBtu)             6.0            5.9


     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 REVENUES

     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 with Transco,  WESCO, an affiliate of Transco,
manages  Transco's  jurisdictional  merchant gas sales.  The long-term  purchase
agreements  managed by WESCO remain in Transco's  name, as do the  corresponding
sales of such purchased gas. Therefore,  Transco continues to record natural gas
sales revenues and the related accounts receivable and cost of natural gas sales
and the related accounts payable for the jurisdictional  merchant sales that are
managed by WESCO.  Through  the agency  agreement,  WESCO  receives  all margins
associated  with  jurisdictional  merchant gas sales  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 Transco's  operating  income or results of  operations.
Transco's  operating  revenues for the three months ended March 31, 1999 related
to its sales services,  including  Transco's cash out sales in settlement of gas
imbalances, increased $15.4 million

<PAGE>


     to $148 million, when compared to the same period in 1998. The increase was
primarily due to higher cash out sales  related to the  settlement of imbalances
and higher sales volumes, partially offset by a lower average gas sales price of
$1.76 per  dekatherm  (Dt) in the first three months of 1999 versus $2.18 per Dt
in 1998.

                                                           Three Months
                                                         Ended March 31,
                                                     -------------------------
Gas Sales Volumes (TBtu)                               1999             1998
------------------------                             --------         --------

Long-term sales                                        51.5             40.5
Short-term sales                                        4.1              9.0
                                                     --------         --------
     Total gas sales                                   55.6             49.5
                                                     ========         ========

STORAGE REVENUES

     Transco's  operating  revenues related to storage  services  decreased $3.1
million to $35.0 million for the three months ended March 31, 1999 when compared
to the same  period in 1998.  This  revenue  decrease  included  a $2.0  million
decrease  due to lower  underground  storage  rates  charged  by others  that is
included in operation  and  maintenance  expenses  and a $1.1  million  decrease
primarily due to lower storage demand charges.

OTHER REVENUES

     Other  operating  revenues  decreased  $0.6 million to $3.1 million for the
three months ended March 31, 1999 when compared to the same period in 1998,  due
to lower Parking and Borrowing Service  revenues,  partially offset by increased
liquids transportation.

OPERATING COSTS AND EXPENSES

      Excluding  the cost of sales and  transportation  of $159  million for the
three months ended March 31, 1999 and $143 million for the comparable  period in
1998,  Transco's  operating  expenses for the three months ended March 31, 1999,
were  approximately  $1 million higher than the comparable  period in 1998. This
increase  was  primarily  attributable  to  higher  administrative  and  general
expense,  partially offset by lower operation and maintenance  expense and lower
taxes other than income taxes. The higher administrative and general expense was
primarily  attributable to higher professional  services expense ($1.8 million),
building rent ($0.6 million) and labor ($0.7 million), along with a $1.1 million
increase in Gas Research  Institute  charges that were offset by a corresponding
revenue  increase  reflecting  the pass through of such costs to customers.  The
lower operation and maintenance expense resulted from a $1.5 million decrease in
charges from others for the operation of certain  Transco  facilities and a $1.7
million decrease in underground  storage rates charged to Transco by others. The
lower taxes other than income taxes of $1.2 million was due to an  adjustment to
a prior year estimate for franchise and sales and use taxes.




<PAGE>


                         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 March 31, 1999, there were no outstanding  borrowings
under the Credit Agreement or short-term money market  facilities.  Net advances
due Transco and its subsidiaries by Williams totaled $352 million.

CAPITAL EXPENDITURES

     As shown in the table below,  Transco's capital  expenditures for the three
months ended March 31, 1999 were $31.0  million,  compared to $49.8  million for
the three months ended March 31, 1998.
<TABLE>
<CAPTION>
                                                                           Three Months
                                                                          Ended March 31,
                                                                       ----------------------
Capital Expenditures                                                    1999          1998
--------------------                                                   ---------    ---------
                                                                           (In Millions)
<S>                                                                    <C>          <C>     
Market-area projects                                                   $    5.2     $    9.6
Supply-area projects                                                        1.3         25.5
Maintenance of existing facilities and other projects                      24.5         14.7
                                                                       ---------    ---------
      Total capital expenditures                                       $   31.0     $   49.8
                                                                       =========    =========
</TABLE>


<PAGE>

      Transco's capital expenditures budget for 1999 and future capital projects
are  discussed in its 1998 Annual Report on Form 10-K.  The following  describes
significant developments related to those projects and any new projects proposed
by Transco.

      BUCCANEER   PIPELINE  PROJECT  Buccaneer  Gas  Pipeline  Company,   L.L.C.
(Buccaneer),  a wholly owned subsidiary of Transco, announced in April 1999 that
it has received, in the aggregate, long-term nonbinding nominations in excess of
1.3 billion  cubic feet per day for pipeline  capacity on a proposed new natural
gas pipeline system  extending from the Mobile Bay area in Alabama to markets in
Florida.  The target  in-service  date for the  project is June 2002.  Buccaneer
plans to file for FERC approval of the project in the third quarter of 1999. The
capital cost of the project will depend upon the level of firm market commitment
received.

      SOUTHCOAST  EXPANSION PROJECT In April 1999,  Transco filed an application
with the FERC for its approval of the  SouthCoast  Expansion  Project,  which is
designed to create additional firm  transportation  capacity on Transco's system
from the terminus of Transco's  existing  Mobile Bay Lateral in Choctaw  County,
Alabama, to delivery points in Transco's Rate Zone 4 (Alabama and Georgia).  The
project  has a target  in-service  date of  November  1,  2000.  The  project is
estimated to cost approximately $108 million.

      CUMBERLAND PIPELINE PROJECT Cumberland Gas Pipeline Company, a partnership
between wholly owned subsidiaries of Transco and AGL Resources Inc., has decided
not to pursue its pipeline project at this time. In lieu of the project, Transco
intends to expand the  capacity of its North  Georgia  extension  as part of the
SouthCoast  Expansion Project in order to meet the firm  transportation  service
requirements of its shippers.

      SUNDANCE  EXPANSION PROJECT In April 1999,  Transco announced its Sundance
Expansion Project,  which would create additional firm  transportation  capacity
from Transco's  Station 65 in Louisiana to Station 165 in Virginia.  The project
has a target in-service date of April 2002.

<PAGE>

OTHER CAPITAL REQUIREMENTS AND CONTINGENCIES

      Transco's capital requirements and contingencies are discussed in its 1998
Annual  Report on Form 10-K.  Other than as  described in Note 3 of the Notes to
Condensed Consolidated Financial Statements, there have been no new developments
from those described in Transco's 1998 Annual Report on Form 10-K with regard to
other capital requirements and contingencies.

      RATE  AND  REGULATORY  REFUNDS  Transco  has  provided  reserves  which it
believes are  adequate  for any rate  refunds that may be required.  On March 1,
1999 Transco issued refunds in the amount of $96.0 million,  including interest,
under Docket No. RP95-197 (see Note 3).

      YEAR 2000 COMPLIANCE  Williams and its  wholly-owned  subsidiaries,  which
includes Transco,  initiated an  enterprise-wide  project in 1997 to address the
year 2000 compliance issue for both traditional and non-traditional  information
technology areas,  including embedded  technology which is prevalent  throughout
the  company.  The project  focuses on all  technology  hardware  and  software,
external  interfaces with customers and suppliers,  operations  process control,
automation and  instrumentation  systems,  and facility items. The phases of the
project are awareness,  inventory and  assessment,  renovation and  replacement,
testing and validation.  The awareness and  inventory/assessment  phases of this
project  as they  relate to both  traditional  and  non-traditional  information
technology areas have been completed. During the inventory and assessment phase,
all systems with possible year 2000 implications were inventoried and classified
into  five  categories:  1)  highest,  business  critical,  2) high,  compliance
necessary  within a short period of time  following  January 1, 2000, 3) medium,
compliance  necessary  within 30 days from January 1, 2000,  4) low,  compliance
desirable  but not  required,  and 5)  unnecessary.  Categories 1 through 3 were
designated   as   critical   and  are  the   major   focus   of  this   project.
Renovation/replacement  and  testing/validation of critical systems are expected
to be completed by June 30, 1999,  except for  replacement  of certain  critical
systems  scheduled  for  completion by September 1, 1999.  Certain  non-critical
systems may not be compliant by January 1, 2000.

<PAGE>

      Testing and validation  activities have begun and will continue throughout
the process with  substantial  completion  expected by June 30, 1999.  Year 2000
test labs are in place and operational.  As was expected, few problems have been
detected during testing for items believed to be compliant.  The following table
indicates the approximate project status, at March 31, 1999, for traditional and
non-traditional  information technology areas. The tested category indicates the
percentage that has been fully tested or otherwise  validated as compliant.  The
untested  category  includes  items that are believed to be compliant  but which
have not yet been  validated.  The not compliant  category  includes items which
have been identified as not year 2000 compliant.

                                         Tested     Untested      Not Compliant
                                         ------     --------      -------------
Traditional Information Technology         59%          7%             34%
Non-Traditional Information Technology     77%         18%              5%

      Transco has initiated a formal communications process with other companies
with which  Transco's  systems  interface or rely on to determine  the extent to
which those companies are addressing their year 2000  compliance.  In connection
with  this   process,   Transco  has  sent   approximately   3,146  letters  and
questionnaires  to third  parties  including  customers,  vendors,  and  service
providers.  Additional communications are being mailed during the second quarter
of 1999.  Transco is  evaluating  responses  as they are  received or  otherwise
investigating the status of these companies' year 2000 compliance efforts. As of
March 31, 1999  approximately 14% of the companies  contacted have responded and
virtually all of these have indicated that they are already compliant or will be
compliant on a timely basis.  Where necessary,  Transco will be working with key
business  partners  to reduce  the risk of a break in service or supply and with
non-compliant companies to mitigate any material adverse effect on Transco.

      Transco   expects  to  utilize  both   internal   resources  and  external
contractors  to complete the year 2000  compliance  project.  Transco has a core
group of 121 people assigned to this project. This group includes one individual
responsible  for  coordinating,   organizing,   managing,   communicating,   and
monitoring the project and another 120 part-time representatives responsible for
completing the project. Depending on which phase the project is in and what area
is being focused on at any given point in time, there can be an additional 36 to
40 employees who are also contributing a portion of their time to the completion
of this project.  Transco has contracted with an external  contractor for a cost
of up to $6.0 million for the remediation of Transco's customer service system.

      Several previously planned system implementations currently in process are
scheduled for completion on or before  September 1, 1999,  which are expected to
lessen  possible  year  2000  impacts.   In  situations   where  planned  system
implementations will not be in service timely, alternative steps are being taken
to make existing systems compliant.

<PAGE>

      Although all critical  systems over which  Transco has control are planned
to be compliant  and tested  before the year 2000,  Transco has  identified  two
areas that would equate to a most-reasonably  likely worst case scenario.  First
is the  possibility  of service  interruptions  due to  non-compliance  by third
parties.  For  example,  power  failures  along the  communications  network  or
transportation  systems would cause service  interruptions.  This risk should be
minimized  by the  enterprise-wide  effort  to  communicate  with  and  evaluate
third-party  compliance  plans.  Another area of risk for  non-compliance is the
delay of system replacements scheduled for completion during 1999. The status of
these  systems  is being  closely  monitored  to reduce  the chance of delays in
completion  dates. It is not possible to quantify the possible  financial impact
if this most reasonably likely worst case scenario were to come to fruition.

      Initial contingency planning began during 1998.  Significant focus on that
phase of the project is taking place in 1999.  Guidelines  for that process were
issued  in  January  1999 in the  form of a  formal  Business  Continuity  Plan.
Contingency plans are being developed for critical business processes,  critical
business partners, suppliers and system replacements that experience significant
delays.  These  plans  are  expected  to be  defined  by  August  31,  1999  and
implemented where appropriate.

      Costs  incurred  for  new  software  and  hardware   purchases  are  being
capitalized  and other costs are being expensed as incurred.  Transco  currently
estimates the total cost of the project,  including the cost of accelerating any
system replacements, to be approximately $7.9 million. The $7.9 million has been
or is expected to be spent as follows:

     Prior to 1998 and during the first quarter of 1998,  Transco conducted the
     project  awareness  and  inventory/assessment  phases  of the  project  and
     incurred minimal costs.

     During  the  second  quarter  of  1998,  $0.1  million  was  spent  on the
     renovation/replacement  and testing/validation phases and on the completion
     of the inventory/assessment phase.

     During  the  third  and  fourth  quarters  of 1998,  the  focus was on the
     renovation/replacement  and  testing/validation  phases and $2.1 million of
     costs were incurred.

     During   the   first   quarter   of   1999,   renovation/replacement   and
     testing/validation  continued,  contingency planning began and $2.0 million
     was expended.

     During the second  quarter of 1999, the primary focus is expected to shift
     to testing/validation and contingency planning and $3.2 million is expected
     to be spent.

     The third and fourth  quarters  of 1999 will focus  mainly on  contingency
     planning and final testing with $0.5 million expected to be spent.

<PAGE>

      Virtually all of the $4.2 million incurred through March 31, 1999 has been
expensed with a minimal amount capitalized.  Of the $3.7 million of future costs
necessary to complete the project within the schedule  described,  virtually all
costs will be expensed, with minimal capitalization of costs. This estimate does
not include Transco's potential share of year 2000 costs that may be incurred by
partnerships and joint ventures in which the company participates but is not the
operator. The costs of previously planned system replacements are not considered
to be year 2000 costs and are,  therefore,  excluded from the amounts  discussed
above.

      The preceding discussion contains  forward-looking  statements  including,
without  limitation,  statements  relating to the company's  plans,  strategies,
objectives,  expectations,  intentions,  and adequate  resources,  that are made
pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
Reform Act of 1995. Readers are cautioned that such  forward-looking  statements
contained  in the year 2000  update are based on certain  assumptions  which may
vary from actual results.  Specifically, the dates on which the company believes
the year 2000 project will be completed and computer systems will be implemented
are based on management's best estimates,  which were derived utilizing numerous
assumptions of future events,  including the continued  availability  of certain
resources,  third-party modification plans and other factors. However, there can
be no guarantee that these estimates will be achieved, or that there will not be
a delay in, or increased costs associated with, the  implementation  of the year
2000 project.  Other specific factors that might cause  differences  between the
estimates and actual results  include,  but are not limited to, the availability
and cost of personnel  trained in these areas, the ability to locate and correct
all relevant computer code, timely responses to and corrections by third-parties
and suppliers,  the ability to implement  interfaces between the new systems and
the systems not being replaced,  and similar  uncertainties.  Due to the general
uncertainty inherent in the year 2000 problem,  resulting in large part from the
uncertainty  of the year 2000  readiness of  third-parties,  the company  cannot
ensure its ability to timely and  cost-effectively  resolve problems  associated
with the year 2000 issue that may affect its operations and business,  or expose
it to third-party liability.

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.

<PAGE>


                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

        See  discussion  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





<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:  May 14, 1999                          By /s/ James C. Bourne
                                              ----------------------
                                              James C. Bourne
                                              Controller
                                              (Principal Accounting Officer)