UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549
                                    FORM 10-Q

(Mark One)
 X      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
---
        EXCHANGE ACT OF 1934

For the quarterly period ended      March 31, 1997

                                       OR

        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
        EXCHANGE ACT OF 1934

For the transition period from                        to

Commission file number      1-2745

                          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 APRIL 30, 1997

     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>
                            March 31, 1997 and December 31, 1996                           1

                          Condensed Consolidated Statements of Income
                            Three Months Ended March 31, 1997 and 1996                     2

                          Condensed Consolidated Statements of Cash Flows
                            Three Months Ended March 31, 1997 and 1996                     3

                          Notes to Condensed Consolidated Financial
                            Statements                                                     4 - 6


               Item 2.    Management's Discussion and Analysis of
                            Financial Condition and Results of
                            Operations                                                     7 - 12

PART II.       Other Information

               Item 1.    Legal Proceedings                                               13

               Item 6.    Exhibits and Reports on Form 8-K                                13

</TABLE>






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

                                                                  March 31,         December 31,
                                                                     1997               1996
                                                                         (In Thousands)
                                     ASSETS
Current Assets:
<S>                                                              <C>                  <C>       
   Cash                                                          $      727           $    2,316
   Notes receivable, primarily from affiliates                       12,559                -
   Accounts receivable                                               79,023              103,736
   Inventories                                                       23,846               24,197
   Gas imbalance receivables                                         18,298               20,161
   Other                                                              6,744                6,112
                                                                 ----------           ----------
         Total Current Assets                                       141,197              156,522
                                                                 ----------           ----------

Investments in Unconsolidated Affiliates and Other                   56,582               50,367
                                                                 ----------           ----------

Plant, Property and Equipment                                     2,363,446            2,422,845
   Less accumulated depreciation and amortization                 1,488,098            1,539,984
                                                                 ----------           ----------
                                                                    875,348              882,861
                                                                 ----------           ----------

Deferred Charges and Other:
   Gas supply realignment costs                                       8,768               11,144
   Other                                                            123,442              130,251
                                                                 ----------           ----------
                                                                    132,210              141,395
                                                                 ----------           ----------
                                                                 $1,205,337           $1,231,145
                                                                 ==========           ==========

                      LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities:
   Long-term debt due within one year                            $    6,964           $    6,964
   Notes payable to affiliates                                        -                    1,189
   Accounts payable                                                  37,567               62,516
   Accrued income taxes                                              15,491                  184
   Other accrued taxes                                                7,118                8,031
   Accrued interest                                                  15,080               17,015
   Gas imbalance payables                                            12,858               17,162
   Other                                                              6,468                8,217
                                                                 ----------           ----------
         Total Current Liabilities                                  101,546              121,278
                                                                 ----------           ----------

Long-Term Debt                                                      305,216              310,536
                                                                 ----------           ----------

Deferred Credits and Other:
   Deferred income taxes                                            116,734              119,850
   Reserves for regulatory matters                                   14,933               14,644
   Other                                                             94,673               97,656
                                                                 ----------           ----------
                                                                    226,340              232,150
                                                                 ----------           ----------

Commitments and Contingencies

Stockholder's Equity:
   Common stock and other capital                                    76,619              100,674
   Retained earnings                                                495,616              466,507
                                                                 ----------           ----------
         Total Stockholder's Equity                                 572,235              567,181
                                                                 ----------           ----------

                                                                 $1,205,337           $1,231,145
                                                                 ==========           ==========
</TABLE>

                             See accompanying notes.


<PAGE>


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

                                                                           Three Months
                                                                          Ended March 31,
                                                                     1997                 1996
                                                                          (In Thousands)
Revenues:
<S>                                                                <C>                  <C>     
   Natural gas sales                                               $ 51,040             $ 60,224
   Transportation and storage                                        93,764               95,561
   Other                                                              7,741                1,477
                                                                   --------             --------
                                                                    152,545              157,262
                                                                   --------             --------

Costs and Expenses:
   Natural gas cost                                                  51,114               57,544
   Transition cost recovery                                           2,265               (5,383)
   Operating and maintenance                                         17,631               19,860
   General and administrative                                        18,043               19,509
   Depreciation and amortization                                     11,653               12,401
   Taxes, other than income                                           5,197                5,138
                                                                   --------             --------
                                                                    105,903              109,069
                                                                   --------             --------

Operating Income                                                     46,642               48,193

Other Income, Net:
   Equity in earnings of unconsolidated affiliates                    2,696                2,555
   Other                                                              3,957                  276
                                                                   --------             --------
                                                                      6,653                2,831
                                                                   --------             --------

Interest:
   Interest income, primarily from affiliates                           146                1,924
   Interest expense                                                  (7,311)             (11,136)
   Interest capitalized                                                 508                   85
                                                                   --------             --------
                                                                     (6,657)              (9,127)
                                                                   --------             --------

Income before Income Taxes                                           46,638               41,897

Income Tax Expense                                                   17,972               16,076
                                                                   --------             --------

Net Income                                                         $ 28,666             $ 25,821
                                                                   ========             ========

</TABLE>














                             See accompanying notes.


<PAGE>


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

                                                                           Three Months
                                                                          Ended March 31,
                                                                     1997                1996
                                                                          (In Thousands)
Cash Flows from Operating Activities:
<S>                                                                <C>                  <C>     
   Net income                                                      $ 28,666             $ 25,821
   Adjustments to reconcile net income to net
      cash provided by (used in) operating
      activities:
         Depreciation and amortization                               11,653               12,401
         Deferred income taxes                                        2,197                4,120
         Equity in earnings of unconsolidated
           affiliates, less distributions                            (2,696)              (2,555)
         Gain on disposal of assets                                    (262)                -
         Reserves for regulatory matters                                288                 (910)
         Gas supply realignment costs                                 2,375               (9,684)
         Change in:
           Accounts receivable                                       21,379                9,016
           Inventories                                                  111               (7,586)
           Accounts payable                                         (22,101)             (13,224)
           Accrued interest and income taxes, net                    14,027                9,197
           Other current assets and liabilities                      (6,096)              (4,772)
         Other                                                         (386)             (16,721)
                                                                   --------             --------
           Net cash provided by operating activities                 49,155                5,103
                                                                   --------             --------

Cash Flows from Investing Activities:
   Plant, property and equipment additions                          (31,766)             (15,517)
   Notes receivable, primarily from affiliates                      (10,000)               2,414
   Proceeds from disposal of assets and other                        (2,470)                (294)
                                                                   --------             --------
           Net cash used in investing activities                    (44,236)             (13,397)
                                                                   --------             --------

Cash Flows from Financing Activities:
   Payments of long-term debt                                        (5,320)              (5,320)
   Changes in short-term borrowings                                  (1,188)              26,066
                                                                   --------             --------
      Net changes in debt                                            (6,508)              20,746
   Dividends paid                                                      -                 (12,400)
                                                                   --------             --------
           Net cash provided by (used in)
              financing activities                                   (6,508)               8,346
                                                                   --------             --------

Net Increase (Decrease) in Cash                                      (1,589)                  52

Cash at Beginning of Period                                           2,316                  711
                                                                   --------             --------

Cash at End of Period                                              $    727             $    763
                                                                   ========             ========

Supplemental Disclosures of Cash Flow Information
Cash Paid for:
   Interest (net of amount capitalized)                            $  8,421             $  9,043
   Income taxes, net                                               $    261             $    869

</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  (Southern) is a wholly owned subsidiary of
Sonat Inc.

        The accompanying condensed consolidated financial statements of Southern
and its  subsidiaries  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.

        Certain amounts in the 1996 condensed  consolidated financial statements
have been reclassified to conform with the 1997 presentation.

2.      Changes in Operations

        On January 1, 1997,  Southern made a non-cash transfer of its investment
of $23,612,000 in Sonat  Intrastate-Alabama  Inc. to Sonat. For the three months
ended March 31, 1996, Sonat  Intrastate-Alabama had revenues of $7,024,000 and a
net loss of $332,000.

3.      Unconsolidated Affiliates

        A subsidiary of Southern owns 50 percent of Bear Creek Storage  Company,
an underground gas storage company. 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
                                                                         Ended March 31,
                                                                     1997              1996
                                                                         (In Thousands)

        <S>                                                         <C>               <C>   
        Revenues                                                    $9,346            $9,241
        Expenses:
          Operating expenses                                         1,241             1,166
          Depreciation                                               1,356             1,353
          Other expenses, net                                        1,333             1,486
                                                                    ------            ------

        Income Reported                                             $5,416            $5,236
                                                                    ======            ======
</TABLE>


4.      Debt and Notes To and From Affiliates

        Unsecured Notes - 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

<PAGE>


4.      Debt and Notes To and From Affiliates (Cont'd)

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. In September 1996 Southern began borrowing from its subsidiaries and
repaid its loan from Sonat.

        Southern has available short-term lines of credit of $50 million through
May 27, 1997.  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 March 31, 1997, no amount was outstanding under Southern's agreement.

5.      Commitments and Contingencies

        Rate Matters - Periodically,  Southern and its subsidiaries make general
rate filings with the Federal Energy Regulatory Commission (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 and its subsidiaries provide reserves relating
to such amounts collected  subject to refund,  as appropriate,  and make refunds
upon  establishment of the final rates. At March 31, 1997,  Southern's rates are
established by a settlement with all of its customers  (except one  representing
approximately  2 percent of  Southern's  firm  transportation  volumes) that was
approved by a FERC order issued in 1995 and are not subject to refund. (See Rate
Matters in Item 2 of this report.)

        Sea Robin - In January 1995, Sea Robin Pipeline Company, a subsidiary of
Southern,  filed with the FERC a petition for a declaratory  ruling that the Sea
Robin  pipeline  system is  engaged  in the  gathering  of  natural  gas and is,
therefore,  exempt from FERC regulation under the Natural Gas Act. In June 1995,
the FERC denied Sea Robin's  petition on the basis that the primary  function of
the Sea Robin  system  is the  interstate  transportation  of gas.  Sea  Robin's
request for  rehearing  of that ruling was denied by the FERC on June 26,  1996.
Sea Robin filed on August 15, 1996,  for judicial  review of the orders  denying
its petition.

        Following the filing of Sea Robin's petition for a gathering  exemption,
several of the  shippers on the Sea Robin system filed with the FERC in February
1995 a  complaint  against  Sea Robin  under  Section 5 of the  Natural  Gas Act
claiming that Sea Robin's rates are unjust and unreasonable.  In its answer, Sea
Robin asked the FERC to dismiss the complaint or to find that its rates continue
to be just and reasonable based on the data it presented. On August 2, 1996, the
FERC issued an order on the complaint,  instituting an investigation and hearing
under Section 5 of the Natural Gas Act and requiring that an initial decision be
issued  by May 2,  1997.  On  December  31,  1996,  Sea Robin  filed a  proposed
settlement of the complaint  proceeding  pursuant to which it would  voluntarily
reduce its transportation rates by $.0042 per

<PAGE>


5.      Commitments and Contingencies (Cont'd)

decatherm  (Dth),  calculated  on a 100  percent  load factor  basis,  effective
January 1, 1997.  The  settlement was supported by the staff of the FERC and one
of two  groups  of  active  intervenors,  but  was  opposed  by the  complainant
shippers, which was the other group of active intervenors.  By order dated April
16, 1997, the FERC approved the settlement with  modifications,  making a merits
determination  as to just and  reasonable  rate levels to become  effective  for
contesting and  non-contesting  parties as of May 1, 1997. Under the FERC Order,
Sea  Robin's  transportation  rates were  reduced an  additional  $.006 per Dth,
calculated  on a 100 percent load factor  basis,  below the proposed  settlement
rate level.  Sea Robin intends to seek rehearing of the settlement  order on the
grounds that it improperly  modified the settlement  terms as to  non-contesting
parties,  and that it failed to properly  consider  the filed case in making its
merits determinations as to contesting parties.




<PAGE>





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

                          SOUTHERN NATURAL GAS COMPANY
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

        The principal  business of Southern  Natural Gas Company  (Southern) and
its  subsidiaries  is  the  interstate   transmission  of  natural  gas  in  the
southeastern United States,  which is regulated by the Federal Energy Regulatory
Commission (FERC).

        Southern is  aggressively  seeking to expand its pipeline  system in its
traditional market area and to connect new gas supplies.

        In April 1997, an amended application and tariff for the Destin Pipeline
was filed with the Federal Energy  Regulatory  Commission  (FERC) to reflect the
fact that units of Shell Oil  Company and Amoco  Corporation  have joined in the
ownership  of this 1 Bcf per day,  $300 million  pipeline  designed to transport
natural gas from the growing eastern Gulf of Mexico  production  area.  Southern
has a one-third interest in this pipeline. Shell and Amoco have made substantial
firm transportation  commitments to this pipeline,  and discussions are underway
with other prospective  shippers.  The pipeline,  which is still subject to FERC
approval, is expected to be completed in mid-1998.

        Also in April 1997,  the FERC issued an order that  permits  Southern to
begin  construction on a $36 million project that will add 46 million cubic feet
per day of firm capacity for customers in Georgia and Tennessee. Construction is
planned to begin in  mid-May,  and this  project is expected to be in service in
late 1997.  Southern is also moving  forward on expansions to eastern  Tennessee
and northern  Alabama that have a total estimated  capital cost of $107 million.
The  North  Alabama  expansion,  which  is  pending  before  the  FERC,  is  now
anticipated to go in service in the summer of 1998. The East Tennessee expansion
is anticipated to go in service in November 1998, subject to FERC approval of an
application that is expected to be filed in May.




<PAGE>


Operations
<TABLE>
<CAPTION>

                                                                          Three Months
                                                                         Ended March 31,
                                                                    1997                1996
                                                                          (In Millions)
Revenues:
<S>                                                                 <C>                 <C>   
   Gas sales                                                        $ 51.0              $ 60.2
   Market transportation and storage                                  83.2                84.4
   Supply transportation                                              10.5                11.2
   Other                                                               7.8                 1.5
                                                                    ------              ------
      Total Revenues                                                 152.5               157.3
                                                                    ------              ------

Costs and Expenses:
   Natural gas cost                                                   51.1                57.6
   Transition cost recovery                                            2.3                (5.4)
   Operating and maintenance                                          17.6                19.9
   General and administrative                                         18.0                19.5
   Depreciation and amortization                                      11.7                12.4
   Taxes, other than income                                            5.2                 5.1
                                                                    ------              ------
                                                                     105.9               109.1
                                                                    ------              ------
      Operating Income                                              $ 46.6              $ 48.2
                                                                    ======              ======

Equity in Earnings of
   Unconsolidated Affiliates                                        $  2.7              $  2.6
                                                                    ======              ======

                                                                       (Billion Cubic Feet)
Volumes:
   Intrastate gas sales                                                  -                   2
   Market transportation                                               170                 208
                                                                       ---                 ---
      Total Market Throughput                                          170                 210
   Supply transportation                                                80                  85
                                                                       ---                 ---
      Total Volumes                                                    250                 295
                                                                       ===                 ===

   Transition gas sales                                                 18                  17
                                                                       ===                 ===
</TABLE>



First Quarter 1997 to First Quarter 1996 Analysis

        Operating  results  for the first  quarter  of 1997  were down  slightly
compared with the prior year primarily due to lower throughput, partially offset
by lower expenses.

        Gas sales revenue and natural gas cost  decreased in the 1997 period due
to lower  volumes  resulting  from the  transfer to Sonat of its  ownership of a
small intrastate pipeline,  which was immaterial to operating results, and sales
of storage gas in 1996. Market  transportation  revenues  decreased due to lower
volumes  resulting  primarily  from  warmer  weather.  The  decrease  in  supply
transportation  revenues  reflects  lower  transportation  volumes  at Sea Robin
Pipeline  Company,  a wholly owned  subsidiary of Southern.  Other  revenues and
transition cost recovery in the 1997 period were higher due to a $16 million gas
supply  realignment  (GSR) cost refund  made  pursuant  to  Southern's  approved
settlement.  Since the impact of this refund was offsetting in nature, operating
income was not affected.  Absent the GSR refund,  other  revenues and transition
cost  recovery  were lower in 1997 due to a higher GSR recovery rate in the 1996
period. Operating and maintenance expenses decreased in 1997 as a result of cost
cutting measures,  and general and administrative  expenses decreased  primarily
due to lower allocations of corporate charges.
<PAGE>

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 FERC Order No. 636,  Southern has terminated or  renegotiated  to
market pricing  substantially  all of its gas supply contracts  through which it
had  historically  obtained  its  long-term  gas supply.  Southern  currently is
incurring  no  take-or-pay  liabilities  under  any  of  these  contracts.   Two
market-priced contracts entered into with Exxon Corporation in 1995 as part of a
settlement of certain other gas purchase contracts account for 85 percent of the
purchase  commitments  in 1997  described  below.  Based on  Southern's  current
expectations  with  respect to natural gas prices in the years  following  1997,
only a small amount of gas volumes are  expected to be at prices  above  market.
Pending the termination of these remaining supply contracts, Southern is selling
a portion of its  remaining  gas  supply to a number of its firm  transportation
customers under contracts that have been extended through November 30, 1997. The
remainder of Southern's gas supply will continue to be sold on a  month-to-month
basis.

        Southern's purchase commitments under its remaining gas supply contracts
for the last nine months of 1997 and years 1998  through  2001 are  estimated as
follows:

                                                                  Estimated
                                                                  Purchase
                                                                 Commitments
                                                                (In Millions)

        1997                                                         $136
        1998                                                           19
        1999                                                           17
        2000                                                           15
        2001                                                           10

        These  estimates are subject to significant  uncertainty due both to the
number of  assumptions  inherent  in these  estimates  and to the wide  range of
possible  outcomes  for each  assumption.  None of the three major  factors that
determine purchase commitments  (underlying reserves,  future deliverability and
future price) is known today with certainty.



<PAGE>


Rate Matters

        A settlement  approved by the FERC in 1995  resolved  all of  Southern's
previously  pending rate  proceedings  and  proceedings to recover GSR and other
transition  costs  associated  with the  implementation  of FERC Order No.  636,
except for one  contesting  party  that  represents  approximately  2 percent of
Southern's  firm  transportation  volumes.  That party has  appealed  the FERC's
approval of the  settlement  and orders in the  proceedings to the United States
Circuit  Court of  Appeals.  The  settlement  provides  that,  except in certain
limited  circumstances,  Southern  will  not  file a  general  rate  case  to be
effective prior to March 1, 1998, but requires  Southern to file a new rate case
no later than September 1, 1999.


                                    ---------------------


Other Income Statement Items
<TABLE>
<CAPTION>

                                                                          Three Months
                                                                         Ended March 31,
                                                                    1997                1996
                                                                          (In Millions)

<S>                                                                  <C>                <C>  
Other Income, Net                                                    $ 6.7              $ 2.8
</TABLE>

        The  increase in Other  Income in the 1997  period  compared to the 1996
period is primarily due to a gain on the termination of an interest rate swap in
1997.  There  was also a higher  level of  allowance  for funds  capitalized  at
Southern in the current period.

<TABLE>
<S>                                                                  <C>                <C>  
Interest Expense, Net                                                $ 6.7              $ 9.1
</TABLE>

        Net interest  expense  decreased  in 1997  compared to 1996 due to lower
interest  expense,  slightly offset by lower interest  income.  Interest expense
decreased  due to much  lower  average  regulatory  reserve  balances  and lower
average  debt  balances.  Interest  income  decreased  due to lower GSR  related
interest income and lower average balances of loans to affiliates.

<TABLE>
<S>                                                                  <C>                <C>  
Income Tax Expense                                                   $18.0              $16.1
</TABLE>

        Income tax expense  increased  in the 1997  period due to higher  pretax
income.



<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

Cash Flows
<TABLE>
<CAPTION>

                                                                          Three Months
                                                                         Ended March 31,
                                                                    1997                1996
                                                                          (In Millions)

<S>                                                                  <C>                <C>  
Operating Activities                                                 $49.2              $ 5.1
</TABLE>

        Cash flow from operations  increased $44.1 million  compared to the 1996
period.  The increase was  attributable to several items.  The change in net gas
supply  realignment  costs  represents  net  recoveries  in the  current  period
compared to net payments in the prior period. The change in accounts  receivable
and accounts payable is primarily attributable to lower gas sales in the current
period. The change in inventory  resulted from Southern's  purchase of materials
for various  expansion  projects in 1996.  The increase in interest and taxes is
attributable  to higher  taxable  earnings in the 1997  period.  The increase in
Other is primarily due to higher purchases of gas stored underground by Southern
in 1996.

<TABLE>
<S>                                                                 <C>                <C>    
Investing Activities                                                $(44.2)            $(13.4)
</TABLE>

        Net cash used in investing  activities  was $30.8 million higher in 1997
compared to 1996. The increase was primarily  attributable to increased loans by
Southern  to its parent and to capital  expenditures,  which were  higher in the
current period due to system expansions at Southern.

<TABLE>
<S>                                                                 <C>                <C>   
Financing Activities                                                $ (6.5)            $  8.3
</TABLE>

        Financing  activities  used $6.5  million in 1997  compared to providing
$8.3 million in 1996. The change was primarily due to borrowings  from Sonat and
dividends paid during the 1996 period.

Capital Resources

        At March 31,  1997,  Southern had lines of credit with a capacity of $50
million. Southern also has a shelf registration with the Securities and Exchange
Commission for up to $200 million in debt securities,  of which $100 million has
been issued.

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



<PAGE>


FORWARD LOOKING STATEMENTS

        From  time  to  time  Southern  may  make  or  publish   forward-looking
statements  relating  to such  matters  as  anticipated  financial  performance,
business plans and prospects,  objectives, future projects, and similar matters.
This report  contains such  forward-looking  statements.  These  forward-looking
statements are based on assumptions  that Southern  believes are  reasonable.  A
variety  of  factors,   however,  could  cause  Southern's  actual  results  and
experience  to  differ   materially  from  the  anticipated   results  or  other
expectations expressed in Southern's forward-looking statements.

        Important  factors that could cause actual results to differ include the
timing and extent of changes in oil and gas prices and underlying demand,  which
would affect profitability and might cause Southern to alter its plans, the pace
of  deregulation  of retail  natural gas and  electricity  markets in the United
States, and the success of management's cost reduction  activities.  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.

        The  success  of  Southern's  expansion  projects  in  its  natural  gas
transmission  segment is  dependent on obtaining  both the  necessary  number of
customer commitments for a project and regulatory approval of the project, which
may encounter opposition by the staff of the FERC,  environmental  groups, local
landowners,  and  customers  of  Southern or its local  distribution  customers.
Southern's regulated natural gas transmission subsidiaries recover substantially
all of their fixed costs,  a return on equity,  and income taxes in the capacity
reservation  component  of their  firm  transportation  rates.  There  can be no
assurance,  however,  that the  existing  customers  of  Southern's  natural gas
transmission  subsidiaries will extend their firm service agreements at the same
levels when their current service agreements expire.





<PAGE>



                           PART II. OTHER INFORMATION


Item 1.  Legal Proceedings

        In Jack J. Grynberg,  ex rel. v. Alaska Pipeline Company,  et al., which
is  described  in Part I, Item 3, of the  Company's  report on Form 10-K for the
year ended December 31, 1996, the court on March 27, 1997, granted the motion to
dismiss filed by the Combined  Defendants Group, which included Southern and Sea
Robin. The dismissal, which was without prejudice against refiling, was based on
two grounds:  (1) the defendants were improperly joined in a single action,  and
(2) the complaint failed to plead fraud with sufficient particularity to state a
claim.


Item 6.  Exhibits and Reports on Form 8-K

(a)     Exhibits(1)

Exhibit
Number                       Exhibits


12*            Computation of Ratio of Earnings to Fixed Charges

27*            Financial Data Schedules for the period ended March 31, 1997
-------------
*   Filed herewith


(b)     Reports on Form 8-K

        The Company did not file any report on Form 8-K during the quarter ended
March 31, 1997.











(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:          May 9, 1997                    By:   /s/ Thomas W. Barker, Jr.
       --------------------------                  --------------------------
                                                   Thomas W. Barker, Jr.
                                                   Treasurer



Date:          May 9, 1997                    By:   /s/ Norman G. Holmes
       --------------------------                  ---------------------
                                                   Norman G. Holmes
                                                   Vice President & Controller