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, 1998

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
             FOR THE TRANSITION PERIOD FROM ......... TO ..........
                          COMMISSION FILE NUMBER 1-7584


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


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

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

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

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


         INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE  ACT OF
1934  DURING  THE  PRECEDING  12 MONTHS  (OR FOR SUCH  SHORTER  PERIOD  THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS),  AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X  NO
                                             ---   ---

THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE, OUTSTANDING AS
OF SEPTEMBER 30, 1998 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  1997 Annual  Report on Form 10-K and 1998 First and
Second Quarter  Reports on Form 10-Q. The  accompanying  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 September
30, 1998,  and results of operations  for the three and nine month periods ended
September 30, 1998 and 1997, and cash flows for the nine months ended  September
30, 1998 and 1997.

     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 1997 Annual Report on
Form 10-K, the 1998 First and Second  Quarter  Reports on Form 10-Q 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>

                                                                                 September 30,            December 31,
                                                                                      1998                    1997
                                                                                -----------------       -----------------

         ASSETS
<S>                                                                                 <C>                     <C>   

Current Assets:

     Cash                                                                           $        801            $      1,321
                                                                                                 
     Receivables:

         Affiliates                                                                        1,736                     868

         Others                                                                           19,789                  27,493

     Advances to affiliates                                                              458,690                 281,454

     Transportation and exchange gas receivables:

         Affiliates                                                                       24,599                  23,567

         Others                                                                           64,204                  66,825

     Inventories                                                                          82,637                  84,240

     Deferred income tax asset                                                            97,436                  90,672

     Other                                                                                18,888                  17,570
                                                                                -----------------       -----------------

         Total current assets                                                            768,780                 594,010
                                                                                -----------------       -----------------



Investments                                                                                7,382                   7,072
                                                                                -----------------       -----------------



Property, Plant and Equipment:

     Natural gas transmission plant                                                    4,205,453               3,977,620

     Less-Accumulated depreciation and amortization                                      584,458                 477,667
                                                                                -----------------       -----------------

         Total property, plant and equipment, net                                      3,620,995               3,499,953
                                                                                -----------------       -----------------



Other Assets                                                                             172,809                 166,628
                                                                                -----------------       -----------------
                                                                                                           
                                                                                    $  4,569,966            $  4,267,663
                                                                                =================       =================




     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>

                                                                                 September 30,          December 31,
                                                                                     1998                   1997
                                                                                ----------------       ----------------

            LIABILITIES AND STOCKHOLDER'S EQUITY
   <S>                                                                              <C>                     <C>

   Current Liabilities:

        Payables:
                                                                                      
            Affiliates                                                              $    33,229             $   44,749    
                                                                                                                
            Others                                                                       69,460                 90,486

        Transportation and exchange gas payables:

            Affiliates                                                                      379                    374

            Others                                                                       11,210                 18,033

        Accrued liabilities                                                             153,777                130,594

        Reserve for rate refunds                                                        306,483                204,554
                                                                                ----------------       ----------------

            Total current liabilities                                                   574,538                488,790
                                                                                ----------------       ----------------


   Long-Term Debt                                                                       975,871                837,832
                                                                                ----------------       ----------------


   Other Long-Term Liabilities:

        Deferred income taxes                                                           847,502                843,108

        Other                                                                           145,142                171,586
                                                                                ----------------       ----------------

            Total other long-term liabilities                                           992,644              1,014,694
                                                                                ----------------       ----------------


   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                                                               374,483                273,917
                                                                                ----------------       ----------------

            Total common stockholder's equity                                         2,026,913              1,926,347
                                                                                ----------------       ----------------

                                                                                    $ 4,569,966             $4,267,663
                                                                                ================       ================



       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
                                                                                          September 30
                                                                             ----------------------------------------
                                                                                   1998                   1997
                                                                             -----------------      -----------------
<S>                                                                          <C>                    <C>
Operating Revenues
   Natural gas sales                                                         $     125,576          $     163,819
   Natural gas transportation                                                      160,753                149,486
   Natural gas storage                                                              35,993                 35,003
   Other                                                                             1,813                  1,146
                                                                             -----------------      -----------------
        Total operating revenues                                                   324,135                349,454
                                                                             -----------------      -----------------

Operating Costs and Expenses:
   Cost of natural gas sales                                                       125,576                163,819
   Cost of natural gas transportation                                               11,938                  4,445
   Operation and maintenance                                                        44,311                 45,017
   Administrative and general                                                       30,852                 30,984
   Depreciation and amortization                                                    39,744                 39,945
   Taxes - other than income taxes                                                   9,305                  9,634
   Other                                                                             1,815                    322
                                                                             -----------------      -----------------
        Total operating costs and expenses                                         263,541                294,166
                                                                             -----------------      -----------------

Operating Income                                                                    60,594                 55,288
                                                                             -----------------      -----------------

Other (Income) and Other Deductions:
   Interest expense                                                                 23,769                 17,935
   Interest income - affiliates                                                     (7,241)                (2,431)
   Allowance for equity and borrowed funds used during construction (AFUDC)         (3,316)                (2,437)
   Miscellaneous other (income) deductions, net                                       (234)                   284
                                                                             -----------------      -----------------
        Total other deductions                                                      12,978                 13,351
                                                                             -----------------      -----------------

Income before Income Taxes                                                          47,616                 41,937

Provision for Income Taxes                                                          18,000                 14,923
                                                                             -----------------      -----------------
  
Net Income                                                                   $      29,616          $      27,014
                                                                             =================      =================


   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>

                                                                                        Nine Months Ended
                                                                                          September 30
                                                                             ----------------------------------------
                                                                                   1998                   1997
                                                                             -----------------      -----------------
<S>                                                                          <C>                    <C>
Operating Revenues
   Natural gas sales                                                         $     401,533          $     475,280
   Natural gas transportation                                                      481,633                459,893
   Natural gas storage                                                             108,115                106,155
   Other                                                                             6,471                  2,738
                                                                             -----------------      -----------------
        Total operating revenues                                                   997,752              1,044,066
                                                                             -----------------      -----------------

Operating Costs and Expenses:
   Cost of natural gas sales                                                       401,533                475,280
   Cost of natural gas transportation                                               32,891                 23,425
   Operation and maintenance                                                       127,051                136,915
   Administrative and general                                                       92,241                 92,807
   Depreciation and amortization                                                   111,526                118,014
   Taxes - other than income taxes                                                  27,091                 28,294
   Other                                                                             2,605                  1,126
                                                                             -----------------      -----------------
        Total operating costs and expenses                                         794,938                875,861
                                                                             -----------------      -----------------

Operating Income                                                                   202,814                168,205
                                                                             -----------------      -----------------

Other (Income) and Other Deductions:
   Interest expense                                                                 69,158                 51,250
   Interest income - affiliates                                                    (20,884)                (4,729)
   Allowance for equity and borrowed funds used during construction (AFUDC)         (7,989)                (5,780)
   Miscellaneous other deductions, net                                                 471                  1,519
                                                                             -----------------      -----------------
        Total other deductions                                                      40,756                 42,260
                                                                             -----------------      -----------------

Income before Income Taxes                                                         162,058                125,945

Provision for Income Taxes                                                          61,492                 47,505
                                                                             -----------------      -----------------
   
Net Income                                                                   $     100,566          $      78,440
                                                                             =================      =================


   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>
                                                                                                Nine Months Ended
                                                                                                   September 30
                                                                                         ---------------------------------
                                                                                             1998                1997
                                                                                         -------------       -------------

       <S>                                                                               <C>                 <C>
       Cash flows from operating activities:

          Net income                                                                     $  100,566          $   78,440

          Adjustments to reconcile  net income to net cash provided by (used in)
            operating activities:

              Depreciation and amortization                                                 116,413             122,817

              Deferred income taxes                                                          (2,370)             (8,468)

              Allowance for equity funds used during construction (AFUDC)                    (5,845)             (3,997)

              Changes in operating assets and liabilities:

                 Receivables                                                                 18,836              20,357

                 Receivables sold                                                           (12,000)             (4,000)

                 Transportation and exchange gas receivables                                  1,589               2,942

                 Inventories                                                                  1,603             (26,825)

                 Payables                                                                   (22,994)            (13,564)

                 Transportation and exchange gas payables                                    (6,818)             (8,229)

                 Accrued liabilities                                                         23,183              30,401

                 Reserve for rate refunds                                                   101,929              (5,166)

                 Other, net                                                                 (32,377)             20,684
                                                                                         -------------       -------------

                       Net cash provided by operating activities                            281,715             205,392
                                                                                         -------------       -------------


       Cash flows from financing activities:

          Additions to long-term debt                                                       298,343             150,000

          Retirement of long-term debt                                                     (160,000)            (99,000)

          Debt issue costs                                                                   (2,060)               (248)

          Dividends on common stock                                                              -               (2,982)
                                                                                         -------------       -------------

                       Net cash provided by financing activities                            136,283              47,770
                                                                                         -------------       -------------


       Cash flows from investing activities:

          Property, plant and equipment:

              Additions, net of equity AFUDC                                               (233,807)           (160,197)

              Changes in accounts payable and accrued liabilities                            (9,552)             (8,675)

          Advances to affiliates, net                                                      (177,236)            (88,325)

          Other, net                                                                          2,077               4,486
                                                                                         -------------       -------------

                       Net cash used in investing activities                               (418,518)           (252,711)
                                                                                         -------------       -------------


       Net increase (decrease) in cash                                                         (520)                451

       Cash at beginning of period                                                            1,321               1,774
                                                                                         -------------       -------------

       Cash at end of period                                                             $      801          $    2,225
                                                                                         =============       =============


       Supplemental disclosures of cash flow information:

          Cash paid (refunded) during the year for :

              Interest (exclusive of amount capitalized)                                 $  47,797           $   56,179            
              Income taxes paid                                                             61,584               35,496
              Income tax refunds received                                                      (77)             (11,759)
                                                                                         


          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) (formerly Williams  Interstate
Natural Gas Systems,  Inc).  WGP is a  wholly-owned  subsidiary  of The Williams
Companies,  Inc.  (Williams).  Prior to May 1, 1997,  Transco was a wholly-owned
subsidiary of Williams.

                            2. BASIS OF PRESENTATION

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

      The condensed  consolidated  financial  statements have been prepared from
the books and records of Transco without audit. Certain information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles have been condensed or omitted.
These condensed  consolidated financial statements should be read in conjunction
with the  consolidated  financial  statements and the notes thereto  included in
Transco's  1997  Annual  Report on Form 10-K and 1998 First and  Second  Quarter
Reports on Form 10-Q.

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

      Certain  reclassifications  have been made in the 1997  financial  
statements to conform to the 1998 presentation.

                    3. CONTINGENT LIABILITIES AND COMMITMENTS

      There have been no new developments from those described in Transco's 1997
Annual Report on Form 10-K or 1998 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 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 are being  litigated by the parties before
a FERC Administrative Law Judge (ALJ).

      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  provided a rate of return on equity for  Transco of
12.49%.  A joint  request for rehearing of the July 29, 1998 order was filed and
is pending before the FERC. Transco believes the reserve previously  provided is
adequate for any refunds  that may be required and has not made any  adjustments
to its reserves pending FERC action in this proceeding.

      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.

      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.

      REGULATION OF SHORT TERM NATURAL GAS  TRANSPORTATION  SERVICE  (DOCKET NO.
RM98-10-000) AND REGULATION OF 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. Comments on the NOPR and
NOI are now due on January 22,  1999.  Transco  will review the NOPR and NOI and
provide comments within the required time period.

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
1997  Annual  Report on Form 10-K and 1998 First and Second  Quarter  Reports on
Form 10-Q, taken as a whole and after consideration of amounts accrued, recovery
from customers,  insurance coverage or other indemnification arrangements,  will
have a materially  adverse  effect upon  Transco's  future  financial  position,
results of operations and cash flow requirements.

                       4. DEBT AND FINANCING ARRANGEMENTS

LONG-TERM DEBT

      Williams and certain of its subsidiaries,  including Transco,  are parties
to a $1 billion credit  agreement  (Credit  Agreement),  under which Transco can
borrow up to $400 million 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 September 30, 1998, Transco had
no outstanding borrowings under this agreement.

      On January 16, 1998,  Transco  issued $200 million of notes that mature on
January 15,  2005,  and $100  million of notes that mature on January 15,  2008,
which pay interest at 6-1/8% and 6-1/4%,  respectively,  per annum on January 15
and July 15 of each year,  beginning July 15, 1998. The notes are not subject to
redemption  and have no sinking fund  provisions.  Proceeds  from the notes were
used for general  corporate  purposes,  including  the repayment of $160 million
borrowed under the Credit 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 September
30, 1998, Transco had no outstanding borrowings under these facilities.

SALE OF RECEIVABLES

      Transco  is a party to an  agreement  that  expires on  January  29,  1999
pursuant  to  which  Transco  can  sell to an  investor  up to $100  million  of
undivided  interests in certain of its trade receivables.  At September 30, 1998
and December 31, 1997, interests in $88 million and $100 million,  respectively,
of these receivables were held by the investor.



                       5. ADOPTION OF ACCOUNTING STANDARDS

      The  Financial  Accounting  Standards  Board issued  three new  accounting
standards,   Statement  of  Financial   Accounting  Standards  (SFAS)  No.  131,
"Disclosures about Segments of an Enterprise and Related  Information," SFAS No.
132, "Employers'  Disclosures about Pensions and Other Postretirement  Benefits"
and  SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities."  SFAS No. 131 and No. 132,  effective  for fiscal  years  beginning
after December 15, 1997, are disclosure-oriented  standards.  Therefore, neither
standard will affect  Transco's  reported  consolidated  results of  operations,
financial  position or cash flows.  SFAS No. 133 is  effective  for fiscal years
beginning  after  June 15,  1999.  This  standard  is not  expected  to have any
significant  effect on Transco's  reported  consolidated  results of operations,
financial position or cash flows.

      The American  Institute of Certified  Public  accountants  (AICPA)  issued
Statement  of  Position  (SOP)  98-5,   "Reporting  on  the  Costs  of  Start-Up
Activities,"  effective for fiscal years  beginning after December 15, 1998. The
SOP is not  expected  to have  any  significant  effect  on  Transco's  reported
consolidated results of operations, financial position or cash flows.


<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  1997 Annual  Report on Form 10-K and in
Transco's  1998  First  and  Second  Quarter  Reports  on Form 10-Q and with the
condensed consolidated financial statements and notes contained in this report.

                              RESULTS OF OPERATIONS

NET INCOME AND OPERATING INCOME

      Transco's  net income for the nine  months  ended  September  30, 1998 was
$100.6 million compared to net income of $78.4 million for the nine months ended
September  30, 1997.  Operating  income for the nine months ended  September 30,
1998 was $202.8  million  compared to $168.2  million for the nine months  ended
September 30, 1997. The higher  operating  income of $34.6 million was primarily
the  result of higher  natural  gas  transportation  and other  revenues,  lower
operation and maintenance  expenses and lower depreciation and amortization,  as
discussed in more detail  below,  partially  offset by a $5.4 million  credit to
cost of natural gas  transportation  that was  recorded in 1997 as a result of a
settlement  related to a prior rate  proceeding.  The increase in net income was
attributable  to the  increased  operating  income.  Net  interest  expense  was
approximately  the  same as net  interest  expense  for the  nine  months  ended
September 30, 1997.

      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.

OPERATING EXPENSES

      Excluding  the cost of sales and  transportation  of $434  million for the
nine months ended September 30, 1998 and $499 million for the comparable  period
in 1997,  Transco's  operating  expenses for the nine months ended September 30,
1998, were  approximately  $17 million lower than the comparable period in 1997.
This  decrease was primarily  attributable  to lower  operation and  maintenance
expenses  and lower  depreciation  and  amortization.  The lower  operation  and
maintenance  expenses are primarily  attributable to a $7.7 million  decrease in
charges from others for the operation of certain Transco facilities, including a
$4.1 million  adjustment  related to settlement  rates  contained in the general
rate  case in Docket  No.  RP97-71  approved  by the FERC in June  1998;  a $1.6
million  adjustment  in  pipe  recoating  costs,  also  related  to the  RP97-71
settlement rates; and lower costs of labor ($1.9 million),  contractual services
($2.6  million) and materials  ($3.7  million);  partly offset by a $4.9 million
increase in underground  storage expense and a $1.7 million increase in lube oil
and odorants  expense.  As described below, the increase in underground  storage
expense was largely offset by an increase in underground  storage revenues.  The
lower  depreciation and amortization  resulted from a $3.2 million adjustment to
accruals on certain general plant assets and a $3.8 million  adjustment  related
to the RP97-71 settlement rates, partly offset by a $0.5 million increase due to
recent  capital  expenditures,  included in the general  rate case in Docket No.
RP97-71 and the  expansion  projects  placed into service in the last quarter of
1997 and during 1998.

TRANSPORTATION REVENUES

      Transco's  operating revenues related to its  transportation  services for
the nine months ended  September  30, 1998 were $482  million,  compared to $460
million for the nine months ended September 30, 1997. The higher  transportation
revenues were  primarily due to benefits of the expansion  projects  placed into
service in November 1997, new rates to recover costs  associated  with increased
capital  expenditures  contained in the general rate case in Docket No.  RP97-71
placed into effect in May 1997 and the Mobile Bay Expansion  placed into service
in 1998,  and a $2  million  adjustment  related  to  RP97-71  settlement  rates
approved by the FERC in June 1998.

      As shown in the table below,  Transco's total  market-area  deliveries for
the nine months ended September 30, 1998 increased 20.7 trillion British Thermal
Units  (TBtu)  (2.1%) when  compared to the same period in 1997.  The  increased
deliveries  were mainly due to 39.6 TBtu delivered  under the Sunbelt  Expansion
Project  in  the  first  nine  months  of  1998,   offset  by  lower   long-haul
transportation deliveries due to milder weather conditions. Transco's production
area deliveries for the nine months ended September 30, 1998 decreased 31.0 TBtu
(16%) when  compared  to the same  period in 1997 as a result of milder  weather
conditions.

      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.



<PAGE>


                                                             Nine Months
                                                         Ended September 30,
                                                       -------------------------

Transco System Deliveries (TBtu)                          1998           1997
--------------------------------
                                                       ----------     ----------


Market-area deliveries:

     Long-haul transportation                              651.3          698.0

     Market-area transportation                            369.0          301.6
                                                       ----------     ----------

         Total market-area deliveries                    1,020.3          999.6

Production-area transportation                             166.0          197.0
                                                       ----------     ----------

         Total system deliveries                         1,186.3        1,196.6
                                                       ==========     ==========



Average Daily Transportation Volumes (TBtu)                  4.3            4.4

Average Daily Firm Reserved Capacity (TBtu)                  6.4            5.5


     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,  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, 1998
related to its sales  services,  including  cash out sales in  settlement of gas
imbalances,  decreased $73.7 million to $402 million,  when compared to the same
period in 1997.  The decrease  was  primarily  due to a lower  average gas sales
price of $2.12 per dekatherm  (Dt) in the first nine months of 1998 versus $2.37
per Dt in 1997 and lower sales volumes.  However,  this decrease in revenues had
no effect on Transco's operating income or net income variances when compared to
the prior year because the  decrease in revenues  was offset by a  corresponding
decrease in the cost of sales.


                                                            Nine Months
                                                        Ended September 30,
                                                      -------------------------

Gas Sales Volumes (TBtu)                                1998             1997
------------------------
                                                      --------         --------


Long-term sales                                         135.7            149.1

Short-term sales                                         18.3             11.0
                                                      --------         --------

     Total gas sales                                    154.0            160.1
                                                      ========         ========


STORAGE REVENUES

     Transco's  operating  revenues related to storage  services  increased $2.0
million to $108.1  million for the nine  months  ended  September  30, 1998 when
compared to the same period in 1997. This revenue increase included $4.5 million
to recover higher  underground  storage rates charged by others that is included
in  operation  and  maintenance  expenses,  partly  offset  by  a  $1.5  million
adjustment  related to  settlement  rates  contained in the general rate case in
Docket  No.  RP97-71  approved  by the FERC in June  1998 and $1.0  million  due
primarily to lower storage withdrawals and lower demand charges.

OTHER REVENUES

     Other  operating  revenues  increased  $3.7 million to $6.5 million for the
nine months ended  September  30, 1998 when compared to the same period in 1997,
due  to  new   services   that  began  in  July  1997  and   increased   liquids
transportation.

                         CAPITAL RESOURCES AND LIQUIDITY

METHOD OF FINANCING

     Transco  funds its  capital  requirements  with cash flows  from  operating
activities,  including  the  sale of trade  receivables,  by  accessing  capital
markets,  by repayments of funds advanced to Williams,  by borrowings  under the
Credit  Agreement  and  short-term  money  market  facilities  and, if required,
advances  from  Williams.  At  September  30,  1998,  there were no  outstanding
borrowings  under the Credit  Agreement or short-term  money market  facilities.
Advances due Transco by Williams totaled $459 million.

     On January 16,  1998,  Transco  issued $200 million of notes that mature in
2005 and $100  million of notes that mature in 2008.  Proceeds  from these notes
were used for  general  corporate  purposes,  including  the  repayment  of $160
million borrowed under the Credit Agreement.

CAPITAL EXPENDITURES

     As shown in the table below,  Transco's  capital  expenditures for the nine
months ended September 30, 1998 were $243.4 million,  compared to $168.9 million
for the nine months ended September 30, 1997.

<TABLE>
<CAPTION>

                                                                            Nine Months

                                                                         Ended September 30,
                                                                       ----------------------

Capital Expenditures                                                    1998          1997
--------------------
                                                                       --------     ---------

                                                                           (In Millions)


<S>                                                                    <C>          <C>        
Market-area projects                                                   $            $   64.1
                                                                          79.9

Supply-area projects                                                     113.2          19.4

Maintenance of existing facilities and other projects                     50.3          85.4
                                                                       --------     ---------

      Total capital expenditures                                       $ 243.4       $ 168.9
                                                                       ========     =========

</TABLE>


      Transco's capital  expenditure budget for 1998 and future capital projects
are  discussed  in its 1997  Annual  Report on Form  10-K and  First and  Second
Quarter Reports on Form 10-Q. The following describes  significant  developments
related to those projects and any new projects proposed by Transco.

      CROSS BAY  PIPELINE  PROJECT  Subsidiaries  of  Transco,  Duke  Energy and
KeySpan Energy have formed Cross Bay[SM] Pipeline Company, L.L.C. (Cross Bay). 
The Cross Bay Pipeline Project is designed to increase natural gas deliveries 
into the New York City metropolitan area by installing compression and looping
to expand Transco's existing Long Beach Lateral by approximately 121 million
cubic feet per day (MMcf) of gas per day. Cross Bay is holding an open season
from October 15 to November 13, 1998, to solicit customers interested in 
subscribing to firm transportation capacity under the project.  Cross Bay plans
to file for FERC approval of the project during the fourth quarter of 1998. The
project is targeted to be in service by the 1999-2000 winter heating season.
Wholly owned subsidiaries of Transco will operate Cross Bay and have a 37.5%
ownership interest.

      FLORIDA PIPELINE PROJECT On October 16, 1998, Transco announced that it is
contacting  various local, state and federal agencies to obtain information that
would enable the company to  determine  the route for a new natural gas pipeline
to provide firm and interruptible  transportation service to Florida. The target
markets  for the  pipeline  would  be new  natural  gas-fired  power  generation
facilities.  At this stage of the  planning  process it is premature to estimate
the size of the pipeline project and the associated capital cost.

      1998 CHEROKEE EXPANSION PROJECT Transco has completed  construction of the
1998 Cherokee  Expansion Project and commenced firm  transportation  through the
expansion  on  November  1, 1998.  The project is an  incremental  expansion  of
Transco's  pipeline  system in its  southern  market  area  which  will  provide
approximately  84 MMcf  per day of new  firm  transportation  capacity  to serve
markets in Georgia.

      MOBILE BAY LATERAL  EXPANSION  PROJECT On August 1, 1998,  Transco  placed
into service Phase I of the Mobile Bay Lateral  Expansion Project which provides
new firm transportation  capacity of 350 MMcf per day from the outer continental
shelf to  Transco=s  Station 82. Phase II of the project was placed into service
on November 9, 1998,  increasing the capacity on the existing onshore lateral to
Station 85 from 520 MMcf per day to 784 MMcf per day.

OTHER CAPITAL REQUIREMENTS AND CONTINGENCIES

      Transco's capital requirements and contingencies are discussed in its 1997
Annual  Report on Form 10-K and 1998  First and Second  Quarter  Reports on Form
10-Q.  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  1997 Annual Report on Form 10-K and 1998 First and Second  Quarter
Reports  on  Form  10-Q  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 October 30,
1998, Transco issued refunds in the amount of $89.5 million, including interest,
in connection  with the settlement of its general rate case Docket No.  RP97-71,
which  settlement  was  approved by the FERC by order dated June 12,  1998.  The
issues not resolved by the settlement are being  litigated by the parties before
a FERC ALJ. In July 1998, the FERC issued an order  modifying its rate of return
methodology (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 information technology areas and
non-traditional   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 it relates 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 - 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.

      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 September 30, 1998, for traditional
information  technology and non-traditional 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.
<TABLE>
<CAPTION>

                                                  Tested          Untested      Not Compliant

<S>                                                 <C>              <C>             <C>
Traditional Information Technology                   8%              31%             61%
Non-Traditional Information Technology              33%              36%             31%
</TABLE>

      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 150 letters and questionnaires
to  third  parties  including  customers,   vendors,  service  providers,   etc.
Additional  communications  are being mailed during the fourth  quarter of 1998.
Transco is evaluating responses as they are received or otherwise  investigating
the status of these companies' year 2000 compliance efforts. As of September 30,
1998  approximately 59% of the companies  contacted have responded and virtually
all of those 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.  Existing  resources
will be  redeployed,  and  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.

      Although all critical  systems over which  Transco has control are planned
to be  compliant  and tested  before the year 2000,  there is a  possibility  of
service  interruptions due to  non-compliance  by third parties.  In particular,
power failures along the communications  network or transportation  system 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.
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.  While estimates of
the total cost of Transco's  project continue to be refined,  Transco  estimates
that  future  costs,  including  the  cost to  accelerate  system  replacements,
necessary  to complete  the project  within the  schedule  described  will total
approximately  $7.5 million.  Of this total,  approximately $7.4 million will be
expensed and the remainder capitalized. 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.
Approximately $0.3 million of costs have been expensed to date. The costs of the
project and the completion dates 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 year 2000 compliance
modification  plans and other  factors.  There can be no  guarantee  that  these
estimates will be achieved and actual results could differ materially from these
estimates.

      The  above  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:  November 13, 1998                     By /s/ James C. Bourne
                                              ------------------------------   
                                              James C. Bourne
                                              Controller
                                              (Principal Accounting Officer)