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     June 30, 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      1-2745

                          SOUTHERN NATURAL GAS COMPANY
             (Exact name of registrant as specified in its charter)

           DELAWARE                                       63-0196650
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                      Identification No.)


           AMSOUTH-SONAT TOWER
           BIRMINGHAM, ALABAMA                              35203
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number:                         (205) 325-7410


                                   NO CHANGE
(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 _

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

                         COMMON STOCK, $3.75 PAR VALUE:

                    1,000 SHARES OUTSTANDING ON JULY 31, 1999

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


<PAGE>


                  SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES

                                      INDEX
<TABLE>
<CAPTION>

                                                                                          Page No.

PART I.    Financial Information

           Item 1.    Financial Statements

                      Condensed Consolidated Balance Sheets
<S>                                                                                       <C>
                         (Unaudited)--June 30, 1999 and December 31, 1998                  1

                      Condensed Consolidated Statements of Income
                         (Unaudited)--Three Months and Six Months Ended
                         June 30, 1999 and 1998                                            2

                      Condensed Consolidated Statements of Cash Flows
                         (Unaudited)--Six Months Ended June 30, 1999 and 1998              3

                      Notes to Condensed Consolidated Financial
                         Statements (Unaudited)                                            4 - 6

           Item 2.    Management's Discussion and Analysis of
                         Financial Condition and Results of
                         Operations                                                        7 - 14

           Item 3.    Quantitative and Qualitative Disclosure About
                         Market Risk                                                      15

PART II.   Other Information

           Item 6.    Exhibits and Reports on Form 8-K                                    16
</TABLE>




<PAGE>

                                  PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements
                          SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                              CONDENSED CONSOLIDATED BALANCE SHEETS
                                           (Unaudited)
<TABLE>
<CAPTION>

                                                                   June 30,          December 31,
                                                                     1999                1998
                                                                          (In Thousands)
                                              ASSETS
Current Assets:
<S>                                                               <C>                   <C>
   Cash                                                           $       35            $      107
   Notes receivable from affiliates                                   59,003                67,329
   Accounts receivable                                                75,994                72,692
   Inventories                                                        19,774                20,190
   Gas imbalance receivables                                           5,037                 5,675
   Other                                                               4,915                   232
                                                                  ----------            ----------
         Total Current Assets                                        164,758               166,225
                                                                  ----------            ----------

Investments in Unconsolidated Affiliates and Other                   165,907               154,743
                                                                  ----------            ----------

Plant, Property and Equipment                                      2,718,994             2,672,225
   Less accumulated depreciation and amortization                  1,550,626             1,533,990
                                                                  ----------            ----------
                                                                   1,168,368             1,138,235
                                                                  ----------            ----------

Deferred Charges and Other                                           111,341               106,924
                                                                  ----------            ----------
                                                                  $1,610,374            $1,566,127
                                                                  ==========            ==========

                               LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities:
   Long-term debt due within one year                             $    -                $    5,000
   Accounts payable                                                   20,367                25,463
   Accrued income taxes                                               11,719                 3,123
   Other accrued taxes                                                 4,357                 4,782
   Accrued interest                                                   23,563                23,688
   Gas imbalance payables                                              8,860                 9,231
   Other                                                              15,799                11,082
                                                                  ----------            ----------
         Total Current Liabilities                                    84,665                82,369
                                                                  ----------            ----------

Long-Term Debt                                                       500,000               500,000
                                                                  ----------            ----------

Deferred Credits and Other:
   Deferred income taxes                                             178,968               164,482
   Other                                                              50,371                57,531
                                                                  ----------            ----------
                                                                     229,339               222,013
                                                                  ----------            ----------

Commitments and Contingencies

Stockholder's Equity:
   Common stock and other capital                                     79,797                79,722
   Retained earnings                                                 716,573               682,023
                                                                  ----------            ----------
         Total Stockholder's Equity                                  796,370               761,745
                                                                  ----------            ----------

                                                                  $1,610,374            $1,566,127
                                                                  ==========            ==========
</TABLE>


                                     See accompanying notes.
<PAGE>

                          SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                           CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                           (Unaudited)
<TABLE>
<CAPTION>

                                                      Three Months                  Six Months
                                                     Ended June 30,               Ended June 30,
                                                   1999           1998         1999            1998
                                                                    (In Thousands)
Revenues:
<S>                                                <C>           <C>           <C>           <C>
   Transportation and storage                      $90,647       $90,006       $187,279      $185,096
   Other                                             4,539         5,494          8,611        15,905
                                                   -------       -------       --------      --------
                                                    95,186        95,500        195,890       201,001
                                                   -------       -------       --------      --------

Costs and Expenses:
   Operating and maintenance                        18,501        19,037         38,034        38,595
   General and administrative                       15,992        12,226         31,561        27,698
   Depreciation and amortization                    14,947        13,048         28,945        18,539
   Taxes, other than income                          5,706         5,371         11,662        10,720
                                                   -------       -------       --------      --------
                                                    55,146        49,682        110,202        95,552
                                                   -------       -------       --------      --------

Operating Income                                    40,040        45,818         85,688       105,449
                                                   -------       -------       --------      --------

Other Income, Net:
   Equity in earnings of
      unconsolidated affiliates                      2,425         5,612          4,850         9,737
   Other, net                                        1,061         1,094          2,935         1,747
                                                   -------       -------       --------      --------
                                                     3,486         6,706          7,785        11,484
                                                   -------       -------       --------      --------

Earnings Before Interest and Taxes                  43,526        52,524         93,473       116,933
                                                   -------       -------       --------      --------

Interest:
   Interest income, primarily
      from affiliates                                1,083         1,170          2,106         2,569
   Interest expense                                 (9,743)       (9,209)       (19,815)      (18,275)
   Interest capitalized                                450           493            933           966
                                                   -------       -------       --------      --------
                                                    (8,210)       (7,546)       (16,776)      (14,740)
                                                   -------       -------       --------      --------

Income Before Income Taxes                          35,316        44,978         76,697       102,193

Income Tax Expense                                  13,780        17,346         29,747        39,345
                                                   -------       -------       --------      --------

Net Income                                         $21,536       $27,632       $ 46,950      $ 62,848
                                                   =======       =======       ========      ========
</TABLE>















                                     See accompanying notes.
<PAGE>

                          SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (Unaudited)
<TABLE>
<CAPTION>
                                                                             Six Months
                                                                           Ended June 30,
                                                                      1999                 1998
                                                                           (In Thousands)
Cash Flows from Operating Activities:
<S>                                                                  <C>                  <C>
   Net income                                                        $ 46,950             $ 62,848
   Adjustments to reconcile net income to net
      cash provided by (used in) operating activities:
         Depreciation and amortization                                 28,945               18,539
         Deferred income taxes                                         14,486               17,194
         Equity in earnings of unconsolidated
           affiliates, less distributions                               1,400               (6,237)
         Reserves for regulatory matters                                 (194)              (4,431)
         Gas supply realignment costs                                  (1,567)                 563
         Change in:
           Accounts receivable                                         (3,302)              12,008
           Inventories                                                    416               (5,015)
           Accounts payable                                            (5,096)             (24,239)
           Accrued interest and income taxes, net                       8,471                  178
           Other current assets and liabilities                          (124)              (4,225)
         Other                                                         (6,389)               2,174
           Net cash provided by operating
              activities                                               83,996               69,357
                                                                     --------             --------

Cash Flows from Investing Activities:
   Plant, property and equipment additions                            (63,015)             (82,234)
   Notes receivable, primarily from affiliates                          8,326               66,184
   Investment in unconsolidated affiliates and other                  (11,979)             (49,568)
                                                                     --------             --------
           Net cash used in investing activities                      (66,668)             (65,618)
                                                                     --------             --------

Cash Flows from Financing Activities:
   Payments of long-term debt                                          (5,000)              (6,220)
   Dividends paid                                                     (12,400)                -
                                                                     --------             --------
           Net cash used in financing activities                      (17,400)              (6,220)
                                                                     --------             --------

Net Decrease in Cash                                                      (72)              (2,481)

Cash at Beginning of Period                                               107                2,905
                                                                     --------             --------

Cash at End of Period                                                $     35             $    424
                                                                     ========             ========

Supplemental Disclosures of Cash Flow Information
Cash Paid for:
   Interest (net of amount capitalized)                              $ 17,404             $ 16,014
   Income taxes paid, net                                               6,589               21,862
</TABLE>









                                     See accompanying notes.


<PAGE>


                          SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                           (Unaudited)

1.      Basis of Presentation

        Southern Natural Gas Company is a wholly owned subsidiary of Sonat Inc.

        The accompanying condensed consolidated financial statements of Southern
Natural Gas and its  subsidiaries  (Southern)  have been  prepared in accordance
with the  instructions  to Form 10-Q and include the  information  and footnotes
required by such  instructions.  In the opinion of management,  all adjustments,
including those of a normal recurring nature,  have been made that are necessary
for a fair presentation of the results for the interim periods presented herein.

2.      Unconsolidated Affiliates

        Southern  Natural  Gas owns a  one-third  interest  in  Destin  Pipeline
Company,  L.L.C.  (Destin)  and a  subsidiary  of  Southern  Natural Gas owns 50
percent of Bear Creek Storage Company (Bear Creek).

        The following is summarized income statement information for Bear Creek.
No provision for income taxes has been included  since its income taxes are paid
directly by the joint-venture participants.

<TABLE>
<CAPTION>
                                                     Three Months                  Six Months
                                                    Ended June 30,               Ended June 30,
                                                1999          1998           1999          1998
                                                                 (In Thousands)

<S>                                             <C>            <C>          <C>            <C>
Revenues                                        $8,940         $8,821       $18,023        $17,850
Expenses:
   Operating expenses                            1,050          1,452         2,261          3,753
   Depreciation                                  1,362          1,360         2,724          2,719
   Other expenses, net                             923          1,116         1,908          2,308
                                                ------         ------       -------        -------

Income Reported                                 $5,605         $4,893       $11,130        $ 9,070
                                                ======         ======       =======        =======
</TABLE>

        The  following  are  summarized  results of  operations  for Destin.  No
provision  for income  taxes has been  included  since its income taxes are paid
directly by joint venture participants.

<TABLE>
<CAPTION>
                                                     Three Months                  Six Months
                                                    Ended June 30,               Ended June 30,
                                                1999          1998           1999          1998
                                                                 (In Thousands)

<S>                                            <C>            <C>           <C>           <C>
Revenues                                       $ 6,093        $ 2,921       $ 9,926       $  4,793
Expenses:
   Operating expenses                            1,754           -            3,379           -
   Depreciation                                  3,229           -            4,815           -
   Interest and other                            2,141         (6,301)        3,896        (10,608)
                                               -------        -------       -------       --------

Income Reported                                $(1,031)       $ 9,222       $(2,164)      $ 15,401
                                               =======        =======       =======       ========
</TABLE>


<PAGE>

3.      Debt and Notes To and From Affiliates

        As part of Sonat's  cash  management  program,  Southern can either loan
funds to or borrow  funds from Sonat.  Notes  receivable  and payable are in the
form of demand notes with rates reflecting Sonat's return on funds loaned to its
subsidiaries, average short-term investment rates and cost of borrowed funds. In
certain  circumstances,  these  notes are  subordinated  in right of  payment to
amounts payable by Sonat under certain long-term credit agreements.

        At June 30, 1999,  Southern had available  short-term lines of credit of
$42.0 million  available  through May 29, 2000.  Borrowings  are available for a
period  of not more  than 364 days and are in the form of  unsecured  promissory
notes  that  bear  interest  at rates  based  on the  banks'  prevailing  prime,
international  or money-market  lending rates. At June 30, 1999, no amounts were
outstanding.

4.      Rate Matters and Contingencies

        Periodically,  Southern  makes  general  rate  filings  with the FERC to
provide for the  recovery  of cost of service  and a return on equity.  The FERC
normally allows the filed rates to become effective, subject to refund, until it
rules on the approved level of rates.  Southern  provides  reserves  relating to
such amounts collected subject to refund, as appropriate, and makes refunds upon
establishment  of the  final  rates.  At June 30,  1999,  Southern's  rates  are
established by a settlement  that was approved by FERC orders issued in 1995 and
1996.  All of its  customers are parties to the  settlement,  and all revenue is
based on the final settlement rates and therefore is not being collected subject
to refund.

     SFAS No. 71,  Accounting  for the Effects of Certain  Types of  Regulation,
provides  that  rate-regulated  entities  account  for  and  report  assets  and
liabilities  consistent with the economic effect of the way in which  regulators
establish  rates,  if the rates  established  are  designed to recover  costs of
providing  the regulated  service and if the  competitive  environment  makes it
reasonable to assume such rates can be charged and collected.  Certain  expenses
and  credits  subject to rate  determination  normally  reflected  in income are
deferred  in the  balance  sheet and are  recognized  in  income as the  related
amounts  are  included  in  service  rates and  recovered  from or  refunded  to
customers. Information regarding Southern's regulatory assets and liabilities is
shown below:

<TABLE>
<CAPTION>
                                                                June 30,          December 31,
                                                                   1999               1998
                                                                      (In Thousands)

   Regulatory Assets:
   <S>                                                           <C>                <C>
      SFAS No. 109 Tax Gross-Up                                  $24,940            $23,319
      Unrecovered Depreciation,                                   14,098             14,053
      Work Force Reduction                                         4,374              5,574
      Charitable Donation                                          6,543              6,994
      Cash Out Differential                                        3,664              4,511
      Other                                                        5,574              6,987
                                                                 -------            -------

                                                                 $59,193            $61,438
                                                                 =======            =======

   Regulatory Liabilities:
      Excess Deferred Taxes Due Customers                        $ 2,957            $ 3,735
                                                                 =======            =======
</TABLE>

        SFAS No. 109 tax gross-up is recorded pursuant to FERC policies allowing
future  recovery of taxes  associated  with the  allowance for funds used during
construction  (AFUDC).   Unrecovered   depreciation  represents  amounts  to  be
recovered  in  future  rates  pursuant  to a  1992  FERC  settlement.  Cash  out
differential  represents the amount of price  differential  cost associated with
storage  transactions  recoverable  pursuant to Southern's customer  settlement.
Excess deferred tax due customers  represents  amounts due customers pursuant to
federal tax rate normalization.

5.      Subsequent Event

        On March 13, 1999, Sonat Inc., and El Paso Corporation (El Paso) entered
into an  Agreement  and Plan of  Merger,  as  amended  (the  Merger  Agreement),
providing  for, among other things,  the merger of El Paso and Sonat.  Under the
terms of the Merger Agreement, Sonat's stockholders will receive one share of El
Paso common  stock for each share of common stock of Sonat they own. The merger,
which has been  approved  by Sonat's and El Paso's  stockholders,  is subject to
certain  customary  conditions,  including,  among  others,  receipt  of certain
required government approvals.




<PAGE>



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

RESULTS OF OPERATIONS

        The  principal   business  of  Southern  Natural  Gas  Company  and  its
subsidiaries  (Southern)  is the  transmission  and  storage of  natural  gas in
interstate  commerce in the  southeastern  United  States.  Southern is actively
pursuing  opportunities to expand its pipeline system in its traditional  market
areas and to connect new gas supplies.

        Units of Shell Oil Company  (Shell) and BP Amoco  Corporation (BP Amoco)
are equal  partners with Southern in the ownership of Destin  Pipeline  Company,
L.L.C. (Destin). Destin owns a 223-mile, 1 billion cubic feet per day interstate
pipeline  system that  transports  natural gas from the growing  eastern Gulf of
Mexico  production  area,  which was placed  fully in service in March 1999.  An
additional 31-mile extension was placed in service in May 1999.

        Construction  is  progressing on Southern's  expansion  project to North
Alabama. The 122-mile, 78 million-cubic-foot-per-day expansion is expected to be
in service in late 1999.

        Southern LNG Inc., a subsidiary of Southern,  filed an application  with
the FERC in July 1999 to  reactivate  its  liquefied  natural  gas (LNG)  marine
receiving  terminal  located on Elba Island,  near Savannah,  Georgia.  The Elba
Island  terminal has been out of service since 1982.  Sonat Energy Services Inc.
(Sonat Energy Services), another Sonat subsidiary, was awarded a 22-year service
agreement  for all of  Elba  Island's  terminaling,  storage,  and  vaporization
capacity. The Elba Island terminal is capable of achieving a peak sendout of 540
million cubic feet of natural gas per day and a baseload  sendout of 330 million
cubic  feet of  natural  gas per day.  Sonat  estimates  that the  capital  cost
associated with  recommissioning  the Elba Island terminal will be approximately
$26 million.

        Sonat Energy Services plans to import LNG from Trinidad through the Elba
Island  terminal.  Shipment  of the LNG to Elba  Island  will be arranged by the
sellers of the LNG, who are a group of producers led by British Gas Trinidad and
Tobago  Limited.  Deliveries  are  estimated  to commence  in mid-2002  and will
provide  approximately  80 Bcf of natural  gas per year  through the Elba Island
terminal  for a  primary  term of 17  years.  The  supply  arrangement  could be
extended for an  additional  term of five years.  Depending  upon  operating and
market  conditions,  Sonat Energy  Services can handle  additional  volumes from
Trinidad or other sources  through its  contracted  capacity in the  reactivated
facility.  Because of growing  natural  gas  demand in the  Southeast,  Southern
expects to initiate  several pipeline  expansion  projects over the next several
years.  The Elba Island  terminal  is located on the  eastern end of  Southern's
service  territory,  making it a  strategically  valuable  source of natural gas
supply.  Not only is the terminal's  reactivation  expected to serve  expansions
within its current  service  territory,  but it is also offers the  potential to
expand the Southern pipeline system to new markets.


<PAGE>

        Southern's  Elba  Island   reactivation   and  Sonat  Energy   Services'
importation  project  are  subject to several  conditions,  including  U.S.  and
Trinidadian  governmental  approvals,  the  execution of final  agreements,  the
finalization  of  plans  relating  to  shipping,  and the  expansion  of its LNG
facility in Trinidad by Atlantic LNG Company of Trinidad and Tobago.

        Southern had  previously  announced  plans to form a 50/50 joint venture
with  Carolina  Power & Light Company  (CP&L) to  construct,  own, and operate a
natural gas  pipeline,  to be known as the Palmetto  Interstate  Pipeline,  from
Southern's  pipeline system to a delivery point in North  Carolina.  The planned
in-service date of the Palmetto Interstate Pipeline has been delayed in order to
allow CP&L time to analyze two other competing pipeline proposals that have been
announced.  Consequently, all ongoing survey, environmental, and route selection
activities  for this  project  have been  suspended.  The  Company  is unable to
predict whether or at what time this project may go forward.

Operations
<TABLE>
<CAPTION>
                                                     Three Months                  Six Months
                                                    Ended June 30,               Ended June 30,
                                                1999          1998           1999          1998
                                                                  (In Millions)
Revenues:
   Market transportation and
<S>                                             <C>           <C>           <C>           <C>
      storage                                   $79.6         $77.9         $165.8        $161.4
   Supply transportation                         11.1          12.1           21.5          23.7
   Other                                          4.5           5.5            8.6          15.9
                                                -----         -----         ------        ------
      Total Revenues                             95.2          95.5          195.9         201.0
                                                -----         -----         ------        ------

Costs and Expenses:
   Operating and maintenance                     18.5          19.0           38.0          38.6
   General and administrative                    16.0          12.2           31.6          27.7
   Depreciation and amortization                 14.9          13.1           28.9          18.6
   Taxes, other than income                       5.7           5.4           11.7          10.7
                                                -----         -----         ------        ------
                                                 55.1          49.7          110.2          95.6
                                                -----         -----         ------        ------

Operating Income                                 40.1          45.8           85.7         105.4
                                                -----         -----         ------        ------
Other Income:
   Equity in Earnings of
      Unconsolidated Affiliates                   2.5           5.6            4.9           9.7
   Other                                          1.0           1.1            2.9           1.8
                                                -----         -----         ------        ------
                                                  3.5           6.7            7.8          11.5
                                                -----         -----         ------        ------

Earnings Before Interest and Taxes              $43.6         $52.5         $ 93.5        $116.9
                                                =====         =====         ======        ======

                                                              (Billion Cubic Feet)
Volumes:
   Market transportation                          135           137            312           322
   Supply transportation                           90           103            179           198
                                                -----         -----         ------        ------
      Total Volumes                               225           240            491           520
                                                =====         =====         ======        ======
</TABLE>



<PAGE>

Second Quarter 1999 to Second Quarter 1998 Analysis

        Earnings before interest and taxes (EBIT) for the second quarter of 1999
decreased $8.9 million  compared with the prior year. The decrease was primarily
due to  higher  general  and  administrative  expenses  as a  result  of  higher
stock-based  compensation  expense  in the 1999  period  and an  insurance  cost
adjustment in the 1998 period, higher depreciation expense as a result of higher
plant  balances  in  1999  and  lower  equity  in  earnings  of   unconsolidated
affiliates.

        Market  transportation  revenues  increased  due to  recent  expansions.
Supply  transportation  revenues  declined  due to lower  volumes  at Sea  Robin
Pipeline  Company.  Equity in earnings of  unconsolidated  affiliates  decreased
primarily due to lower earnings at Destin  Pipeline as a result of allowance for
funds used during construction (AFUDC) capitalized in the 1998 period.

Six Months 1999 to Six Months 1998 Analysis

        EBIT  decreased  $23.4  million for the six months  ending June 30, 1999
compared  with the  1998  period.  The  decrease  was  primarily  due to  higher
depreciation  and  amortization  expense,  the  recognition of a royalty reserve
reversal of $4.2 million in the 1998 period,  higher general and  administrative
expenses,   and  lower   equity  in  earnings  of   unconsolidated   affiliates.
Depreciation and amortization expenses increased primarily due to a $7.0 million
pretax  adjustment  of the  salvage  value on certain  fixed  assets in the 1998
period and higher plant balances in 1999.  General and  administrative  expenses
increased in the 1999 period  primarily due to higher  stock-based  compensation
expense in the 1999 period and an insurance reserve reversal in the 1998 period.
Equity in earnings of unconsolidated affiliates decreased primarily due to lower
earnings at Destin Pipeline as a result of higher AFUDC  capitalized in the 1998
period.

        Partially  offsetting  the  decrease  was the  effect of  higher  market
transportation revenues due to recent expansions. Supply transportation revenues
declined  due to lower  volumes  at Sea Robin  Pipeline  Company.  Other  income
increased due to higher AFUDC equity and the sale of certain facilities.

Natural Gas Sales and Supply

        Sales by Southern of natural gas are  anticipated to continue only until
Southern's  remaining supply contracts expire, are terminated,  or are assigned.
As a result of its  restructuring  pursuant  to FERC  directives  in past years,
Southern  terminated or renegotiated to market pricing  virtually all of its gas
supply contracts  through which it had  historically  obtained its long-term gas
supply.  Pending the  termination  or  expiration  of the few  remaining  supply
contracts,  Southern's  remaining  gas supply is being sold on a  month-to-month
basis.  Because  Southern is  primarily a gas  transporter  and does not realize
significant  margins on gas sales, the net of gas sales revenues and natural gas
cost is included in other revenue.


<PAGE>

        Except  for the  sale  of its  remaining  gas  supply  described  above,
Southern's  participation  in gas  supply  activities  will  be  limited  to the
purchase  and  sale of gas  from  time to time  as may be  required  for  system
management purposes.

        Southern's  annual purchase  commitments total less than $21 million per
year for 1999 and subsequent  years.  Based on Southern's  current  expectations
with  respect  to  natural  gas  prices  in 1999  and the  years  following,  an
immaterial volume of gas is expected to be at prices above market.

Rate Matters

        Under  terms of a  settlement  approved  by the  FERC,  all of  Southern
Natural Gas' previously  pending rate proceedings and proceedings to recover gas
supply realignment and other transition costs associated with the implementation
of FERC Order No. 636 were resolved.  The settlement  requires  Southern Natural
Gas to file a new rate case no later than  September 1, 1999.  Southern  expects
the rates filed in that rate case to become effective after normal suspension by
the FERC on March 1, 2000,  subject to refund upon settlement or final litigated
conclusion of the rate case.

        In June  1999,  in a case on  remand  from the  Fifth  Circuit  Court of
Appeals and in response to an  application  filed earlier by  Southern's  wholly
owned  subsidiary,  Sea Robin Pipeline Company (Sea Robin),  the FERC determined
that Sea Robin  performs a  nonjurisdictional  gathering  function in part and a
jurisdictional  transmission function in part. Specifically,  the FERC concluded
that the two legs of Sea Robin's inverted  Y-shaped  pipeline system in the Gulf
of Mexico  upstream of the Vermilion  Block 149  compressor  station  constitute
gathering  facilities,  while a 66.3-mile,  36-inch pipeline downstream from the
Vermilion 149 station to Erath,  Louisiana is a  transmission  facility.  In the
order, the FERC required Sea Robin to file tariff sheets with separate gathering
rates for the gathering services to be provided on the gathering segments of Sea
Robin's system. Sea Robin has filed for an extension of time to make this tariff
filing until the FERC makes a decision on rehearing.







<PAGE>


Other Income Statement Items
<TABLE>
<CAPTION>
                                                  Three Months                   Six Months
                                                 Ended June 30,                Ended June 30,
                                                1999          1998           1999          1998
                                                                 (In Millions)

<S>                                             <C>           <C>            <C>           <C>
Interest Expense, Net                           $ 8.2         $ 7.5          $16.8         $14.7
</TABLE>

        Net interest  expense  increased in both the  three-month  and six-month
periods of 1999 due to higher  average debt levels.  The increase was  partially
offset by a smaller  provision  for  interest  related  to income  taxes and the
effect of lower average interest rates in the current period.

<TABLE>
<S>                                             <C>           <C>            <C>           <C>
Income Tax Expense                              $13.8         $17.3          $29.7         $39.3
</TABLE>

        Income tax expense  decreased  in the 1999  periods due to lower  pretax
income.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows
<TABLE>
<CAPTION>
                                                                                 Six Months
                                                                               Ended June 30,
                                                                             1999          1998
                                                                                (In Millions)

<S>                                                                         <C>           <C>
Operating Activities                                                        $ 84.0        $ 69.4
</TABLE>

        Cash flow from operations  increased $14.6 million compared to 1998. The
change in  depreciation  is  primarily  due to the  adjustments  made in 1998 to
reflect   salvage  value  on  certain  fixed  assets.   Equity  in  earnings  of
unconsolidated  affiliates  was  lower  in 1999  compared  to 1998  due to lower
operating results at Destin (discussed  earlier in the operating  section).  The
change in reserves for regulatory  matters is  attributable to the reversal of a
reserve in 1998  originally  established  for royalties on take-or-pay  contract
buyouts. The change in accounts receivable and accounts payable is primarily due
to the timing of intercompany  settlements.  The change in accrued  interest and
income taxes primarily reflects the timing of an income tax payment.

<TABLE>
<S>                                                                         <C>           <C>
Investing Activities                                                        $(66.7)       $(65.6)
</TABLE>

        Net cash used in investing  activities  was $1.1 million  higher in 1999
compared to 1998. Higher repayments of intercompany  loans by Southern's parent,
Sonat  Inc.,  in the  prior  period  were  partially  offset  by  lower  capital
expenditures and investments in the Destin pipeline joint venture in the current
period.



<PAGE>


<TABLE>
<CAPTION>
                                                                                 Six Months
                                                                               Ended June 30,
                                                                             1999          1998
                                                                                (In Millions)

<S>                                                                         <C>           <C>
Financing Activities                                                        $(17.4)       $ (6.2)
</TABLE>

        Net cash used in  financing  activities  was higher in 1999  compared to
1998 due to the payment of an intercompany  dividend to Southern's parent in the
current period.

CAPITAL RESOURCES

        At June 30, 1999,  Southern  Natural Gas had bank lines of credit with a
total capacity of $42.0 million,  all of which was available.  Southern  Natural
Gas also has a shelf  registration  statement  with the  Securities and Exchange
Commission  which  provides  for the  issuance  of up to $500.0  million in debt
securities of which $100.0 million has been issued.

        Southern's  capital  expenditures  and other investing  requirements for
1999 are expected to total  approximately  $173  million.  This amount  reflects
investments in unconsolidated affiliates, expansions and other projects.

        Southern  expects to continue to use cash from operations and borrowings
in either the public or private  markets or loans from affiliates to finance its
capital and other corporate expenditures.

YEAR 2000 PROJECT

        The  following  disclosure  contains  forward-looking   statements.  The
Company's  ability to meet its  objectives  identified  below is dependent  upon
several factors that could cause actual results to differ  materially from those
set forth  below,  including  the timely  provision  of  necessary  upgrades and
modifications by suppliers. In addition, the Company cannot guarantee that third
parties on whom it depends for essential  services  will convert their  critical
systems and  processes in a timely  manner.  Each of the phases of the Company's
Year 2000 project is progressing and the Company  believes that it is taking all
reasonable  and  appropriate  steps  necessary to be able to operate in the Year
2000 and beyond.

        To answer the Year 2000 challenge, the Sonat Board of Directors directed
that a corporate-wide initiative be undertaken. A consulting firm was engaged to
assist in this  effort.  The  Company has  divided  its Year 2000  project  into
assessment,  remediation,  testing, and contingency planning phases.  During the
assessment phase, the Company completed a comprehensive inventory of IT systems,
embedded  systems,  equipment,  computer  hardware,  and software that rely on a
computer  chip as well as service  providers  that could be impacted by the Year
2000 problem.  For vendor-supplied  items, the Company has contacted its vendors
seeking written  verification of Year 2000 readiness.  In addition,  the Company
continues  to  communicate  with its  critical  service  providers  and business
partners  such  as  natural  gas  suppliers,   pipelines,   electric  utilities,
telecommunication  service  providers,  banks,  and other suppliers of goods and
services,  to  determine  the extent to which the Company is  vulnerable  to the
failure of those third-parties to remediate their Year 2000 issues.


<PAGE>

        The remediation  phase includes  completing the replacement of mainframe
systems with Year 2000-ready vendor packages on new client/server  platforms and
performing  any  required  modifications  and  upgrades  identified  during  the
assessment  phase.  The testing  phase  involves  testing  systems for Year 2000
readiness.  The Company has  completed  remediation  and testing of its critical
systems  and  has  substantially   completed  remediation  and  testing  of  its
non-critical systems.

        The Company  relies on producers of natural gas,  natural gas pipelines,
natural  gas  distribution  companies,  and  natural  gas  marketing  companies.
External infrastructure,  such as electric,  telecommunication and water service
is also  necessary for the Company's  basic  operations.  Should any third party
with which the Company has a material relationship fail, the impact could become
a  significant   challenge  to  the  Company's  ability  to  perform  its  basic
operations.  Due to the nature of the Company's business,  contingency plans are
already in place for certain  conditions,  including  plans to provide  pipeline
system  reliability.  The  company has  reviewed  these  existing  plans and has
developed  additional  plans  as  practicable  for  critical  systems,   service
providers and business partners. A consulting firm was engaged to assist in this
effort. These plans involve  contingencies for failures that may result from the
Year 2000 problem,  and include plans to establish control centers to facilitate
communications  in the event of a  telecommunications  failure  and  staffing at
selected locations on the Company's pipeline system.

        The  estimated  cost to the Company of the Year 2000 project for capital
as well as  general  and  administrative  costs is  expected  to be less than $5
million.  As of June 30,  1999,  the Company  has  incurred  approximately  $2.0
million  in Year 2000  project  costs.  The  Company  expects  to fund Year 2000
expenditures  from  normal  operations.   The  timing  of  expenditures  is  not
indicative of readiness efforts or progress to date.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

        This  Quarterly  Report  contains  certain  forward-looking   statements
regarding  Southern's  business  plans  and  prospects,   objectives,  expansion
projects,  proposed capital  expenditures  and expected  performance or results.
These forward-looking statements are based on assumptions that Southern believes
are reasonable,  but are subject to a wide range of risks and uncertainties and,
as a result,  actual  results  and  experience  may differ  materially  from the
anticipated  results or other  expectations  expressed  in such  forward-looking
statements.  Such statements are made in reliance on the safe harbor  provisions
of the Private Securities Litigation Reform Act of 1995.

        Important  factors that could cause actual results to differ include the
requirements to receive various governmental approvals to proceed with expansion
projects  and  LNG  projects,   and  the  execution  of  final   agreements  and
unanticipated construction delays in connection with such projects.  Realization
of Southern's objectives and expected performance can also be adversely affected
by the actions of customers and competitors,  changes in governmental regulation
of Southern's  businesses,  and changes in general  economic  conditions and the
state of domestic capital markets. There can be no assurance that Destin will be
able to timely connect new fields or that the production  from those fields will
allow it to meet its planned throughput objectives.



<PAGE>


Item 3.        Quantitative and Qualitative Disclosure About Market Risk

        Financial  instruments  of  Southern  expose it to  interest  rate risk.
Southern's  entire  portfolio of interest rate risk instruments is classified as
non-trading.

        Southern's  interest  income is  sensitive  to  changes  in the level of
short-term interest rates in the United States. In general, Southern Natural Gas
either loans excess funds to Sonat or repays its short-term  borrowings.  Excess
cash  generated by or  contributed  to joint  venture  projects is invested on a
short-term basis pending distribution or expenditure on capital projects.






<PAGE>


                           Part II. OTHER INFORMATION


Item 6.        Exhibits and Reports on Form 8-K

(a)     Exhibits1

Exhibit
Number                              Exhibits


12*        Computation of Ratio of Earnings to Fixed Charges

27*        Financial Data Schedule for the period ended June 30, 1999
-------------
*   Filed herewith

(b)     Reports on Form 8-K

        The Company did not file any report on Form 8-K during the quarter ended
June 30, 1999.





















1 The Company will furnish to requesting  security  holders the exhibits on this
list upon the  payment  of a fee of $.10 per page up to a  maximum  of $5.00 per
exhibit.  Requests  must be in  writing  and  should be  addressed  to R.  David
Hendrickson,   Secretary,   Southern  Natural  Gas  Company,  P.  O.  Box  2563,
Birmingham, Alabama 35202-2563.


<PAGE>



                  SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES




                                   SIGNATURES





        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                               Southern Natural Gas Company



Date:        August 11, 1999              By:   /s/ Thomas W. Barker, Jr.
       --------------------------              --------------------------
                                               Thomas W. Barker, Jr.
                                               Vice President-Finance




Date:        August 11, 1999              By:   /s/ Norman G. Holmes
       --------------------------              ---------------------
                                               Norman G. Holmes
                                               Vice President & Controller