UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                                    FORM 10-Q

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

For the quarterly period ended      March 31, 1999

                                       OR

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

For the transition period from                        to

Commission file number      1-2745

                          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, 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
                            (Unaudited)--March 31, 1999 and
<S>                                                                                      <C>
                            December 31, 1998                                              1

                          Condensed Consolidated Statements of Income
                            (Unaudited)--Three Months Ended
                            March 31, 1999 and 1998                                        2

                          Condensed Consolidated Statements of Cash Flows
                            (Unaudited)--Three Months Ended
                            March 31, 1999 and 1998                                        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

               Item 3.    Quantitative and Qualitative Disclosure About
                            Market Risk                                                   13

PART II.       Other Information

               Item 5.    Legal Proceedings                                               14

               Item 6.    Exhibits and Reports on Form 8-K                                14
</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,
                                                                     1999               1998
                                                                         (In Thousands)
                                     ASSETS
Current Assets:
<S>                                                               <C>                   <C>       
   Cash                                                           $       72            $      107
   Notes receivable from affiliates                                   55,737                67,329
   Accounts receivable                                                71,977                72,692
   Inventories                                                        20,187                20,190
   Gas imbalance receivables                                           8,423                 5,675
   Other                                                               6,316                   232
                                                                  ----------            ----------
         Total Current Assets                                        162,712               166,225
                                                                  ----------            ----------

Investments in Unconsolidated Affiliates and Other                   167,097               154,743
                                                                  ----------            ----------

Plant, Property and Equipment                                      2,691,286             2,672,225
   Less accumulated depreciation and amortization                  1,541,114             1,533,990
                                                                  ----------            ----------
                                                                   1,150,172             1,138,235
                                                                  ----------            ----------

Deferred Charges and Other                                           108,386               106,924
                                                                  ----------            ----------
                                                                  $1,588,367            $1,566,127
                                                                  ==========            ==========

                      LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities:
   Long-term debt due within one year                             $    -                $    5,000
   Accounts payable                                                   18,116                25,463
   Accrued income taxes                                               11,489                 3,123
   Other accrued taxes                                                 1,334                 4,782
   Accrued interest                                                   21,876                23,688
   Gas imbalance payables                                              8,673                 9,231
   Other                                                              13,322                11,082
                                                                  ----------            ----------
         Total Current Liabilities                                    74,810                82,369
                                                                  ----------            ----------

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

Deferred Credits and Other:
   Deferred income taxes                                             172,026               164,482
   Other                                                              54,372                57,531
                                                                  ----------            ----------
                                                                     226,398               222,013
                                                                  ----------            ----------

Commitments and Contingencies

Stockholder's Equity:
   Common stock and other capital                                     79,722                79,722
   Retained earnings                                                 707,437               682,023
                                                                  ----------            ----------
         Total Stockholder's Equity                                  787,159               761,745
                                                                  ----------            ----------

                                                                  $1,588,367            $1,566,127
                                                                  ==========            ==========
</TABLE>

                             See accompanying notes.


<PAGE>


                  SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                           Three Months
                                                                          Ended March 31,
                                                                      1999                 1998
                                                                           (In Thousands)
Revenues:
<S>                                                                 <C>                   <C>     
   Transportation and storage                                       $ 96,632              $ 95,090
   Other                                                               4,072                10,411
                                                                    --------              --------
                                                                     100,704               105,501
                                                                    --------              --------

Costs and Expenses:
   Operating and maintenance                                          19,533                19,558
   General and administrative                                         15,569                15,472
   Depreciation and amortization                                      13,998                 5,491
   Taxes, other than income                                            5,956                 5,349
                                                                    --------              --------
                                                                      55,056                45,870
                                                                    --------              --------

Operating Income                                                      45,648                59,631
                                                                    --------              --------

Other Income, Net:
   Equity in earnings of unconsolidated affiliates                     2,425                 4,125
   Other, net                                                          1,874                   653
                                                                    --------              --------
                                                                       4,299                 4,778
                                                                    --------              --------

Earnings Before Interest and Taxes                                    49,947                64,409
                                                                    --------              --------

Interest:
   Interest income                                                     1,023                 1,399
   Interest expense                                                  (10,072)               (9,066)
   Interest capitalized                                                  483                   473
                                                                    --------              --------
                                                                      (8,566)               (7,194)
                                                                    --------              --------

Income Before Income Taxes                                            41,381                57,215

Income Tax Expense                                                    15,967                21,999
                                                                    --------              --------

Net Income                                                          $ 25,414              $ 35,216
                                                                    ========              ========
</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,
                                                                      1999                1998
                                                                          (In Thousands)
Cash Flows from Operating Activities:
<S>                                                                 <C>                   <C>     
   Net income                                                       $ 25,414              $ 35,216
   Adjustments to reconcile net income to net
      cash provided by operating activities:
         Depreciation and amortization                                13,998                 5,491
         Deferred income taxes                                         7,544                 9,500
         Equity in earnings of unconsolidated
           affiliates, less distributions                             (2,425)               (4,125)
         Reserves for regulatory matters                                 194                (4,046)
         Gas supply realignment costs                                 (1,832)                  353
         Change in:
           Accounts receivable                                           715                 9,520
           Accounts payable                                           (7,347)              (25,667)
           Accrued interest and income taxes, net                      6,554                10,277
           Other current assets and liabilities                      (10,595)               (5,590)
         Other                                                        (9,307)               (3,278)
                                                                    --------              --------
           Net cash provided by operating activities                  22,913                27,651
                                                                    --------              --------

Cash Flows from Investing Activities:
   Plant, property and equipment additions                           (20,069)              (25,619)
   Notes receivable, primarily from affiliates                        11,592                20,802
   Proceeds from disposal of assets and other                         (9,471)              (15,344)
                                                                    --------              --------
           Net cash used in investing activities                     (17,948)              (20,161)
                                                                    --------              --------

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

Net Increase (Decrease) in Cash                                          (35)                1,270

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

Cash at End of Period                                               $     72              $  4,175
                                                                    ========              ========

Supplemental Disclosures of Cash Flow Information
Cash Paid for:
   Interest (net of amount capitalized)                             $  8,378              $  8,795
   Income taxes, net                                                      57                 1,321
</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.
                                        Three Months
                                       Ended March 31,
                                   1999              1998
                                       (In Thousands)

   Revenues                        $9,083            $9,029
   Expenses:
      Operating expenses            1,211             2,301
      Depreciation                  1,362             1,359
      Other expenses, net             985             1,192
                                   ------            ------

   Income Reported                 $5,525            $4,177
                                   ======            ======

        The  following  is  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.
                                                Three Months
                                               Ended March 31,
                                           1999              1998
                                               (In Thousands)

   Revenues                               $ 3,833           $ 1,872
   Expenses:
      Operating expenses                    1,625              -
      Depreciation and amortization         1,586              -
      Interest and other                    1,755            (4,307)
                                          -------           -------

   Income (Loss) Reported                 $(1,133)          $ 6,179
                                          =======           =======


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 March 31, 1999, Southern had available  short-term lines of credit of
$50.0 million  available  through May 31, 1999.  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, 1999, no amounts were
outstanding.


<PAGE>

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 March  31,  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:
                                              March 31,         December 31,
                                                 1999               1998
                                                    (In Thousands)

   Regulatory Assets:
      SFAS No. 109 Tax Gross-Up                $24,160            $23,319
      Unrecovered Depreciation,                 14,076             14,053
      Work Force Reduction                       4,974              5,574
      Charitable Donation                        6,769              6,994
      Cash Out Differential                      2,291              4,511
      Other                                      6,217              6,987
                                               -------            -------

                                               $58,487            $61,438
                                               =======            =======

   Regulatory Liabilities:
      Excess Deferred Taxes Due Customers      $ 3,346            $ 3,735
                                               =======            =======

        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 shareholders will receive one share of El
Paso common  stock for each share of common  stock of Sonat they own. The merger
is subject to certain customary conditions, including, among others, approval by
the stockholders of Sonat and 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 is scheduled to go in service in the second quarter
of 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 early in 2000.

        On March 3, 1999,  Carolina  Power & Light  Company  (CP&L) and Southern
announced  plans to form a 50/50 joint venture to construct,  own, and operate a
180-mile, 30-inch, natural gas pipeline from the terminus of Southern's pipeline
system in Aiken, South Carolina,  to an interconnect with the pipeline system of
North Carolina  Natural Gas Corporation in Robeson County,  North Carolina.  The
new  Palmetto   Interstate   Pipeline  (Palmetto)  will  provide  a  significant
interstate natural gas pipeline connection in eastern North Carolina.

        Palmetto  has a planned  initial  capacity of 200 million to 300 million
cubic feet of natural  gas per day and will be expanded  to  accommodate  future
growth.  CP&L plans to subscribe  for a  substantial  portion of the capacity in
Palmetto to fuel new electric  generation  being  developed for its customers in
the  Carolinas,  with the remainder to be used to increase the region's  natural
gas availability. An open season began April 1, 1999, for customers to subscribe
to firm  capacity on the pipeline and will  conclude on May 31, 1999.  Depending
upon the resulting firm subscription,  the capital cost for Palmetto is expected
to be $200 million to $250 million.

        The proposed  schedule  calls for the new pipeline to be  operational in
April 2002.  Construction is scheduled to begin in the summer of 2001, following
the  completion of engineering  and  environmental  preparation  and federal and
state permitting. The exact route of the pipeline has not yet been determined. A
detailed   environmental   analysis   is  under  way  to   establish   the  most
environmentally sound path.


<PAGE>

        As part of the project  Southern  expects to undertake a major expansion
of its existing  interstate  pipeline system,  consisting of extensive  pipeline
looping and  additional  compression at points from  Mississippi  to Aiken.  The
extent of Southern's pipeline expansion will depend on capacity requirements and
the extent, if any, of existing capacity turned back by existing customers in an
open season for  turnback  expected  to occur in the second or third  quarter of
1999.  The maximum  costs  expected to be incurred by Southern for its expansion
are estimated at $430 million.  This expansion will provide significant rate and
operational benefits to Southern's existing customers.

        The  construction  of Palmetto  and  expansion  of the  Southern  system
require  approval by the FERC as well as other federal and state agencies and is
likely to be challenged on both  environmental  grounds and economic  grounds by
certain of its competitors, environmental groups, or landowners. Construction is
also subject to execution of definitive agreements between CP&L and Southern.

Operations
                                                        Three Months
                                                       Ended March 31,
                                                  1999                1998
                                                        (In Millions)
Revenues:
   Market transportation and storage              $ 86.2              $ 83.5
   Supply transportation                            10.4                11.6
   Other                                             4.1                10.4
                                                  ------              ------
      Total Revenues                               100.7               105.5
                                                  ------              ------

Costs and Expenses:
   Operating and maintenance                        19.5                19.6
   General and administrative                       15.6                15.5
   Depreciation and amortization                    14.0                 5.5
   Taxes, other than income                          6.0                 5.3
                                                  ------              ------
                                                    55.1                45.9
                                                  ------              ------
Operating Income                                    45.6                59.6
                                                  ------              ------
Other Income:
   Equity in earnings of
      unconsolidated affiliates                      2.4                 4.1
   Other                                             1.9                  .7
                                                  ------              ------
                                                     4.3                 4.8
                                                  ------              ------

Earnings Before Interest and Taxes                $ 49.9              $ 64.4
                                                  ======              ======

                                                     (Billion Cubic Feet)
Volumes:
   Market transportation                             177                 185
   Supply transportation                              89                  95
                                                  ------              ------
      Total Volumes                                  266                 280
                                                  ======              ======



<PAGE>

First Quarter 1999 to First Quarter 1998 Analysis

        EBIT for the first quarter of 1999 decreased $14.5 million compared with
the  prior  year.  The  decrease  was  primarily  due to a $7.0  million  pretax
adjustment  of the salvage  value on certain fixed assets in the 1998 period and
higher  depreciation  expense as a result of higher plant  balances in 1999. The
1998 period also includes the recognition of a royalty reserve  reversal of $4.2
million.  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.  Equity  in  earnings  of  unconsolidated   affiliates
decreased  primarily due to lower  earnings at Destin  Pipeline as a result of a
high  allowance for funds used during  construction  (AFUDC)  capitalized in the
1998 period.  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  substantially 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 are included in other revenue.

        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  conclusion of the rate case.
<PAGE>
Other Income Statement Items

                                                       Three Months
                                                      Ended March 31,
                                                 1999                1998
                                                       (In Millions)

Interest Expense, Net                             $ 8.6              $ 7.2

        Net interest  expense  increased in the 1999 period compared to the same
period last year 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.

Income Tax Expense                                $16.0              $22.0

     Income tax expense decreased in the 1999 period compared to the 1998 period
due to lower pretax earnings.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Operating Activities                              $22.9              $27.7

        Cash flow from operations  decreased $4.8 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.  The change in  reserves  for
regulatory  matters  is  attributable  to the  reversal  of a  reserve  in  1998
originally set up for royalties on take-or-pay  contract buyouts.  The change in
deferred  taxes is primarily  attributable  to the  depreciation  adjustment and
reserve reversal  discussed above,  which were all non-cash,  and an increase in
plant in  service.  The  change in  accounts  receivable  and  accounts  payable
reflects the timing of  intercompany  settlements.  The change in other  current
assets  reflects the payment of a 1999 insurance  premium in 1999 rather than in
the previous year.

Investing Activities                              $(17.9)            $(20.2)

        Net cash used in  investing  activities  was $2.3  million  less in 1999
compared to 1998. The decrease was primarily  attributable to lower  investments
in Destin Pipeline in 1999 and lower capital  expenditures related to Southern's
capital  programs  in  1999.   Partially  offsetting  the  decrease  were  lower
repayments to Southern Natural Gas of loans in 1999 by Southern's parent,  Sonat
Inc.

Financing Activities                              $ (5.0)            $ (6.2)

     Net cash used in  financing  activities  was lower in 1999 compared to the
1998 period due to the retirement of a capital lease in 1998.


<PAGE>

Capital Resources

        At March 31, 1999,  Southern Natural Gas had bank lines of credit with a
total capacity of $50.0 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  $172  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 contact entities with whom it has a material relationship,  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 issue.


<PAGE>

        The Company is currently  engaged in the  remediation and testing phases
of the  Year  2000  project.  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.  Non-critical  systems  are  scheduled  to be
remediated and tested by June 30, 1999.

        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,  including  plans to  provide  pipeline  system  reliability.
Because of the  additional  uncertainties  caused by the Year 2000 problem,  the
Company is developing  additional  contingency plans as practicable for critical
systems,  service  providers and business  partners.  A consulting firm has been
engaged to assist in this effort.  These plans involve developing  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 Company is scheduled to have these plans completed by June
30, 1999.

        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 March 31,  1999,  the Company has  incurred  approximately  $1.5
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 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 5. Legal Proceedings

        In United States of America ex rel. Jack J. Grynberg v. Southern Natural
Gas Company,  et al.,  which is  described in Item 3 in Part I of the  Company's
Report on Form 10-K for the year ended December 31, 1998, the Justice Department
notified  the courts on April 9, 1999,  that it was  declining  to  intervene in
these cases.  Grynberg  served his  complaint on Southern and its  affiliates on
April 7, 1999.

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 Schedule for the period ended March 31, 1999
-------------
*   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, 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:         May 12, 1999                   By:   /s/ Thomas W. Barker, Jr.
       --------------------------                 --------------------------
                                                  Thomas W. Barker, Jr.
                                                  Vice President-Finance



Date:         May 12, 1999                   By:   /s/ Norman G. Holmes
       --------------------------                 ---------------------
                                                  Norman G. Holmes
                                                  Vice President & Controller