##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-Q


(Mark One)


þ QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2006


OR





o 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




|                                                                                                      |  |                                         
|----------------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                              |  | 63-0196650                              
|(State or Other Jurisdiction
    of Incorporation or Organization)                                    |  | (I.R.S. Employer
    Identification No.)
|                                                                                                     
|El Paso Building
    1001 Louisiana Street
    Houston, Texas(Address of Principal Executive Offices) |  | 77002(Zip Code)                         

Telephone Number: (713) 420-2600


þ o


12b-2




|                           |                      |                         
|-------------------------- | -------------------- | ------------------------
|Large accelerated filer  o | Accelerated filer  o | Non-accelerated filer  þ

12b-2 o þ






SOUTHERN NATURAL GAS COMPANY
MEETS THE CONDITIONS OF GENERAL INSTRUCTION H(1)(a) AND (b)
TO FORM 10-Q AND
IS THEREFORE FILING THIS REPORT WITH A REDUCED DISCLOSURE FORMAT
AS PERMITTED BY SUCH INSTRUCTION.










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##### 










SOUTHERN NATURAL GAS COMPANY


TABLE OF CONTENTS


|                                              |  |                                                                                                                                    |  |      |    | 
|--------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                              |  | Caption                                                                                                                            |  | Page |   
|                                              |  |                                                                                                                                    |  |      |   
|                                              |  | PART I  Financial Information                                                                                                     |  |      |    | 
|Item 1.                                       |  | Financial Statements                                                                                                               |  |      | 1  | 
|Item 2.                                       |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                          |  |      | 8  | 
|Item 3.                                       |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                                     |  |      | *  | 
|Item 4.                                       |  | Controls and Procedures                                                                                                            |  |      | 10 | 
|                                              |  | PART II  Other Information                                                                                                        |  |      |    | 
|Item 1.                                       |  | Legal Proceedings                                                                                                                  |  |      | 12 | 
|Item 1A.                                      |  | Risk Factors                                                                                                                       |  |      | 12 | 
|                                              |  | Cautionary Statements for Purposes of the
    Safe Harbor Provisions of the Private Securities
    Litigation Reform Act of 1995 |  |      |    | 
|Item 2.                                       |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                                                    |  |      | *  | 
|Item 3.                                       |  | Defaults Upon Senior Securities                                                                                                    |  |      | *  | 
|Item 4.                                       |  | Submission of Matters to a Vote of Security
    Holders                                                                            |  |      | *  | 
|Item 5.                                       |  | Other Information                                                                                                                  |  |      | 12 | 
|Item 6.                                       |  | Exhibits                                                                                                                           |  |      | 13 | 
|                                              |  | Signatures                                                                                                                         |  |      | 14 | 
|Certification of CEO Pursuant to Section 302 
|Certification of CFO Pursuant to Section 302 
|Certification of CEO Pursuant to Section 1350
|Certification of CFO Pursuant to Section 1350








|  |                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | We have not included a response to this item in this document
    since no response is required pursuant to the reduced disclosure
    format permitted by General Instruction H to
    Form 10-Q.



|     |  |                                 |  |     |  |                        
|---- |  | ------------------------------- |  | --- |  | -----------------------
|/d   |  | = per day                       |  | LNG |  | = liquefied natural gas
|BBtu |  | = billion British thermal units |  |     |  |                        





i



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##### Table of Contents






PART I  FINANCIAL INFORMATION







|        |                     
|------- | --------------------
|Item 1. | Financial Statements

SOUTHERN NATURAL GAS COMPANY




CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND


COMPREHENSIVE INCOME


(In millions)


(Unaudited)


|                                        |                                          |               |     |    |      |   |     |    |  
|--------------------------------------- | ---------------------------------------- | ------------- | --- | -- | ---- | - | --- | -- | -
|                                        |                                          | Quarter Ended |    
|                                        |                                          | March 31,     |    
|                                        |                                          |               |    
|                                        |                                          | 2006          |     |    | 2005 |  
|                                        |                                          |               |     |    |      |  
|Operating revenues                      |                                          | $             | 135 |    |      | $ | 125 |   
|                                        |                                          |               |     |    |      |  
|Operating expenses                      |                                          |               |     |    |      |   |     |   
|                                        | Operation and maintenance                |               |     | 47 |      |   |     | 40 |  
|                                        | Depreciation, depletion and amortization |               |     | 13 |      |   |     | 13 |  
|                                        | Gain on sale of long-lived assets        |               |     |   |      |   |     | (7 | )
|                                        | Taxes, other than income taxes           |               |     | 8  |      |   |     | 7  |  
|                                        |                                          |               |     |    |      |  
|                                        |                                          |               | 68  |    |      |   | 53  |   
|                                        |                                          |               |     |    |      |  
|Operating income                        |                                          |               | 67  |    |      |   | 72  |   
|Earnings from unconsolidated affiliates |                                          |               | 13  |    |      |   | 18  |   
|Other income, net                       |                                          |               | 3   |    |      |   | 7   |   
|Interest and debt expense               |                                          |               | (23 | )  |      |   | (23 | ) 
|Affiliated interest income              |                                          |               | 4   |    |      |   | 1   |   
|                                        |                                          |               |     |    |      |  
|Income before income taxes              |                                          |               | 64  |    |      |   | 75  |   
|Income taxes                            |                                          |               | 20  |    |      |   | 23  |   
|                                        |                                          |               |     |    |      |  
|Net income                              |                                          |               | 44  |    |      |   | 52  |   
|Other comprehensive income              |                                          |               |    |    |      |   | 1   |   
|                                        |                                          |               |     |    |      |  
|Comprehensive income                    |                                          | $             | 44  |    |      | $ | 53  |   
|                                        |                                          |               |     |    |      |  



1



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SOUTHERN NATURAL GAS COMPANY




CONDENSED CONSOLIDATED BALANCE SHEETS


(In millions, except share amounts)


(Unaudited)


|                                       |                                                                                           |                                                   |                                            |       |              |       |       |       |    |       | 
|-------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------- | ------------------------------------------ | ----- | ------------ | ----- | ----- | ----- | -- | ----- | 
|                                       |                                                                                           | March 31,                                         |                                            |       | December 31, |      
|                                       |                                                                                           | 2006                                              |                                            |       | 2005         |      
|                                       |                                                                                           |                                                   |                                            |       |              |      
|ASSETS                                
|                                      
|Current assets                         |                                                                                           |                                                   |                                            |       |              |       |       |      
|                                       | Cash and cash equivalents                                                                 |                                                   | $                                          |      |              |       | $     |      |   
|                                       | Accounts and notes receivable                                                             |                                                   |                                            |       |              |       |       |       |   
|                                       |                                                                                           | Customer, net of allowance of $1 in 2006 and 2005 |                                            |       | 55           |       |       |       | 58 |      
|                                       |                                                                                           | Affiliates                                        |                                            |       | 38           |       |       |       |   |      
|                                       |                                                                                           | Other                                             |                                            |       | 7            |       |       |       | 5  |      
|                                       | Materials and supplies                                                                    |                                                   |                                            | 12    |              |       |       | 12    |   
|                                       | Deferred income taxes                                                                     |                                                   |                                            | 6     |              |       |       | 9     |   
|                                       | Other                                                                                     |                                                   |                                            | 12    |              |       |       | 17    |   
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                       |                                                                                           |                                                   | Total current assets                       |       |              | 130   |       |       |    | 101   | 
|                                       |                                                                                           |                                                   |                                            |       |              |      
|Property, plant and equipment, at cost |                                                                                           |                                                   | 3,435                                      |       |              |       | 3,369 |      
|                                       | Less accumulated depreciation, depletion and amortization                                 |                                                   |                                            | 1,384 |              |       |       | 1,368 |   
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                       |                                                                                           |                                                   | Total property, plant and equipment, net   |       |              | 2,051 |       |       |    | 2,001 | 
|                                       |                                                                                           |                                                   |                                            |       |              |      
|Other assets                           |                                                                                           |                                                   |                                            |       |              |       |       |      
|                                       | Investments in unconsolidated affiliates                                                  |                                                   |                                            | 698   |              |       |       | 697   |   
|                                       | Note receivable from affiliate                                                            |                                                   |                                            | 267   |              |       |       | 339   |   
|                                       | Other                                                                                     |                                                   |                                            | 61    |              |       |       | 52    |   
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                       |                                                                                           |                                                   | 1,026                                      |       |              |       | 1,088 |      
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                       |                                                                                           |                                                   | Total assets                               |       | $            | 3,207 |       |       | $  | 3,190 | 
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                      
|LIABILITIES AND STOCKHOLDERS EQUITY  
|                                      
|Current liabilities                    |                                                                                           |                                                   |                                            |       |              |       |       |      
|                                       | Accounts payable                                                                          |                                                   |                                            |       |              |       |       |       |   
|                                       |                                                                                           | Trade                                             |                                            | $     | 24           |       |       | $     | 40 |      
|                                       |                                                                                           | Affiliates                                        |                                            |       | 13           |       |       |       | 17 |      
|                                       |                                                                                           | Other                                             |                                            |       | 25           |       |       |       | 12 |      
|                                       | Taxes payable                                                                             |                                                   |                                            | 74    |              |       |       | 67    |   
|                                       | Accrued interest                                                                          |                                                   |                                            | 6     |              |       |       | 30    |   
|                                       | Other                                                                                     |                                                   |                                            | 10    |              |       |       | 11    |   
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                       |                                                                                           |                                                   | Total current liabilities                  |       |              | 152   |       |       |    | 177   | 
|                                       |                                                                                           |                                                   |                                            |       |              |      
|Long-term debt                         |                                                                                           |                                                   | 1,196                                      |       |              |       | 1,195 |      
|                                       |                                                                                           |                                                   |                                            |       |              |      
|Other liabilities                      |                                                                                           |                                                   |                                            |       |              |       |       |      
|                                       | Deferred income taxes                                                                     |                                                   |                                            | 322   |              |       |       | 320   |   
|                                       | Other                                                                                     |                                                   |                                            | 39    |              |       |       | 44    |   
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                       |                                                                                           |                                                   | 361                                        |       |              |       | 364   |      
|                                       |                                                                                           |                                                   |                                            |       |              |      
|Commitments and contingencies          |                                                                                           |                                                   |                                            |       |              |       |       |      
|Stockholders equity                   |                                                                                           |                                                   |                                            |       |              |       |       |      
|                                       | Common stock, par value $1 per share; 1,000 shares
    authorized, issued and outstanding |                                                   |                                            |      |              |       |       |      |   
|                                       | Additional paid-in capital                                                                |                                                   |                                            | 340   |              |       |       | 340   |   
|                                       | Retained earnings                                                                         |                                                   |                                            | 1,164 |              |       |       | 1,120 |   
|                                       | Accumulated other comprehensive loss                                                      |                                                   |                                            | (6    | )            |       |       | (6    | ) 
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                       |                                                                                           |                                                   | Total stockholders equity                 |       |              | 1,498 |       |       |    | 1,454 | 
|                                       |                                                                                           |                                                   |                                            |       |              |      
|                                       |                                                                                           |                                                   | Total liabilities and stockholders equity |       | $            | 3,207 |       |       | $  | 3,190 | 
|                                       |                                                                                           |                                                   |                                            |       |              |      



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SOUTHERN NATURAL GAS COMPANY




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)


|                                        |                                                                               |                                                                              |                                           |     |      |     |   |     |    |     |  
|--------------------------------------- | ----------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------- | --- | ---- | --- | - | --- | -- | --- | -
|                                        |                                                                               | Quarter Ended                                                                |                                          
|                                        |                                                                               | March 31,                                                                    |                                          
|                                        |                                                                               |                                                                              |                                          
|                                        |                                                                               | 2006                                                                         |                                           |     | 2005 |    
|                                        |                                                                               |                                                                              |                                           |     |      |    
|Cash flows from operating activities    |                                                                               |                                                                              |                                           |     |      |     |   |    
|                                        | Net income                                                                    |                                                                              | $                                         | 44  |      |     | $ | 52  |   
|                                        | Adjustments to reconcile net income to net cash from operating
    activities |                                                                              |                                           |     |      |     |   |     |   
|                                        |                                                                               | Depreciation, depletion and amortization                                     |                                           |     | 13   |     |   |     | 13 |    
|                                        |                                                                               | Deferred income taxes                                                        |                                           |     | 4    |     |   |     | 10 |    
|                                        |                                                                               | Gain on sale of long-lived assets                                            |                                           |     |     |     |   |     | (7 | )  
|                                        |                                                                               | Earnings from unconsolidated affiliates, adjusted for cash
    distributions |                                           |     | (1   | )   |   |     | (6 | )  
|                                        |                                                                               | Other non-cash income items                                                  |                                           |     | (1   | )   |   |     | (3 | )  
|                                        |                                                                               | Asset and liability changes                                                  |                                           |     | (47  | )   |   |     | 19 |    
|                                        |                                                                               |                                                                              |                                           |     |      |    
|                                        |                                                                               |                                                                              | Net cash provided by operating activities |     |      | 12  |   |     |    | 78  |  
|                                        |                                                                               |                                                                              |                                           |     |      |    
|Cash flows from investing activities    |                                                                               |                                                                              |                                           |     |      |     |   |    
|                                        | Additions to property, plant and equipment                                    |                                                                              |                                           | (49 | )    |     |   | (39 | ) 
|                                        | Proceeds from the sale of assets                                              |                                                                              |                                           |    |      |     |   | 32  |   
|                                        | Net change in affiliate advances                                              |                                                                              |                                           | 34  |      |     |   | (73 | ) 
|                                        | Net change in restricted cash                                                 |                                                                              |                                           | 2   |      |     |   | 2   |   
|                                        | Other                                                                         |                                                                              |                                           | 1   |      |     |   |    |   
|                                        |                                                                               |                                                                              |                                           |     |      |    
|                                        |                                                                               |                                                                              | Net cash used in investing activities     |     |      | (12 | ) |     |    | (78 | )
|                                        |                                                                               |                                                                              |                                           |     |      |    
|Net change in cash and cash equivalents |                                                                               |                                                                              |                                          |     |      |     |  |    
|Cash and cash equivalents               |                                                                               |                                                                              |                                           |     |      |     |   |    
|                                        | Beginning of period                                                           |                                                                              |                                           |    |      |     |   |    |   
|                                        |                                                                               |                                                                              |                                           |     |      |    
|                                        | End of period                                                                 |                                                                              | $                                         |    |      |     | $ |    |   
|                                        |                                                                               |                                                                              |                                           |     |      |    



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SOUTHERN NATURAL GAS COMPANY


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


1. Basis of Presentation and Significant Accounting
Policies


Basis of Presentation


10-Q 10-Q 10-K.


Significant Accounting Policies


10-K,


Accounting for Pipeline Integrity Costs.


2. Credit Facilities


10-K.


3. Commitments and Contingencies


Legal Proceedings


Gas Measurement Cases. re: Natural Gas Royalties Qui Tam Litigation,


4



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##### Table of Contents



Royalty Claim.






Environmental Matters








| |             
| | ------------
| | Other Matter

Duke Litigation.


5



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##### Table of Contents





4. Investments in Unconsolidated Affiliates and
Transactions with Affiliates


Investments in Unconsolidated
Affiliates




|                        |                                                         |               |   |    |      |  |   |    | 
|----------------------- | ------------------------------------------------------- | ------------- | - | -- | ---- |  | - | -- | 
|                        |                                                         | 2006          |   |    | 2005 | 
|                        |                                                         |               |   |    |      | 
|                        |                                                         | (In millions) |  
|Operating results data: |                                                         |               |   |    |      |  |   |   
|                        | Operating revenues                                      |               | $ | 58 |      |  | $ | 58 | 
|                        | Operating expenses                                      |               |   | 29 |      |  |   | 25 | 
|                        | Income from continuing operations and net
    income(1) |               |   | 14 |      |  |   | 16 | 




|    |                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The difference between our proportionate share of our equity
    investments net income and our earnings from
    unconsolidated affiliates reflected in our income statement is
    due primarily to the excess purchase price amortization related
    to Citrus and differences between the estimated and actual
    equity earnings from our investments.



|                        |                                                  |               |   |    |      |  |   |    | 
|----------------------- | ------------------------------------------------ | ------------- | - | -- | ---- |  | - | -- | 
|                        |                                                  | 2006          |   |    | 2005 | 
|                        |                                                  |               |   |    |      | 
|                        |                                                  | (In millions) |  
|Operating results data: |                                                  |               |   |    |      |  |   |   
|                        | Operating revenues                               |               | $ | 53 |      |  | $ | 53 | 
|                        | Operating expenses                               |               |   | 27 |      |  |   | 22 | 
|                        | Income from continuing operations and net income |               |   | 11 |      |  |   | 13 | 



Transactions with Affiliates


Cash Management Program.


Taxes.


Other Affiliate Balances.


Affiliate Revenues and Expenses.


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|                                                   |  |               |    |  |      |   |    | 
|-------------------------------------------------- |  | ------------- | -- |  | ---- | - | -- | 
|                                                   |  | 2006          |    |  | 2005 |  
|                                                   |  |               |    |  |      |  
|                                                   |  | (In millions) |   
|Revenues from affiliates                           |  | $             | 2  |  |      | $ | 2  | 
|Operation and maintenance expenses from affiliates |  |               | 13 |  |      |   | 12 | 

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

10-K, 10-Q.


Results of Operations




|                                        |                  |                      |       |    |      |   |       |    | 
|--------------------------------------- | ---------------- | -------------------- | ----- | -- | ---- | - | ----- | -- | 
|                                        |                  | 2006                 |       |    | 2005 |  
|                                        |                  |                      |       |    |      |  
|                                        |                  | (In millions, except |      
|                                        |                  | volume amounts)      |      
|Operating revenues                      |                  | $                    | 135   |    |      | $ | 125   |   
|Operating expenses                      |                  |                      | (68   | )  |      |   | (53   | ) 
|                                        |                  |                      |       |    |      |  
|                                        | Operating income |                      |       | 67 |      |   |       | 72 | 
|Earnings from unconsolidated affiliates |                  |                      | 13    |    |      |   | 18    |   
|Other income, net                       |                  |                      | 3     |    |      |   | 7     |   
|                                        |                  |                      |       |    |      |  
|                                        | EBIT             |                      |       | 83 |      |   |       | 97 | 
|Interest and debt expense               |                  |                      | (23   | )  |      |   | (23   | ) 
|Affiliated interest income              |                  |                      | 4     |    |      |   | 1     |   
|Income taxes                            |                  |                      | (20   | )  |      |   | (23   | ) 
|                                        |                  |                      |       |    |      |  
|                                        | Net income       |                      | $     | 44 |      |   | $     | 52 | 
|                                        |                  |                      |       |    |      |  
|Throughput volumes
    (BBtu/d)(1)      |                  |                      | 3,043 |    |      |   | 3,195 |   
|                                        |                  |                      |       |    |      |  






|    |                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Throughput volumes include volumes associated with our
    proportionate share of our 50 percent equity interest in
    Citrus and billable transportation throughput volumes for
    storage injection.



|                                                       |                      |                         |    |    |         |   |    |       |   |   |        |    |   |   |    |     |  
|------------------------------------------------------ | -------------------- | ----------------------- | -- | -- | ------- | - | -- | ----- | - | - | ------ | -- | - | - | -- | --- | -
|                                                       |                      |                         |    |    |         |   |    | EBIT  |  
|                                                       |                      | Revenue                 |    |    | Expense |   |    | Other |   |   | Impact |   
|                                                       |                      |                         |    |    |         |   |    |       |   |   |        |   
|                                                       |                      | Favorable/(Unfavorable) |   
|                                                       |                      | (In millions)           |   
|Elba Island expansion                                  |                      | $                       | 5  |    |         | $ | (1 | )     |   | $ | (2     | )  |   | $ | 2  |    
|Higher services revenues                               |                      |                         | 7  |    |         |   |   |       |   |   |       |    |   |   | 7  |    
|Gain on the sale of assets in 2005                     |                      |                         |   |    |         |   | (7 | )     |   |   |       |    |   |   | (7 | )  
|Hurricane Katrina                                      |                      |                         |   |    |         |   | (5 | )     |   |   |       |    |   |   | (5 | )  
|Gas not used in operations and other natural gas sales |                      |                         | (3 | )  |         |   | (1 | )     |   |   |       |    |   |   | (4 | )  
|Earnings from our equity investment in Citrus          |                      |                         |   |    |         |   |   |       |   |   | (5     | )  |   |   | (5 | )  
|Other(1)                                               |                      |                         | 1  |    |         |   | (1 | )     |   |   | (2     | )  |   |   | (2 | )  
|                                                       |                      |                         |    |    |         |   |    |       |   |   |        |   
|                                                       | Total impact on EBIT |                         | $  | 10 |         |   | $  | (15   | ) |   | $      | (9 | ) |   | $  | (14 | )
|                                                       |                      |                         |    |    |         |   |    |       |   |   |        |   






|    |                                              
|--- | ---------------------------------------------
|(1) | Consists of individually insignificant items.

8



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Elba Island Expansion.


Higher Services Revenues.


Gain on the Sale of Assets.


Hurricane Katrina.


Gas Not Used in Operations and Other Natural Gas Sales. 10-K.


Citrus.


Affiliated Interest Income




Income Taxes


|                   |  |                   |    |   |      |   |    |  
|------------------ |  | ----------------- | -- | - | ---- | - | -- | -
|                   |  | Quarter Ended     |   
|                   |  | March 31,         |   
|                   |  |                   |   
|                   |  | 2006              |    |   | 2005 |  
|                   |  |                   |    |   |      |  
|                   |  | (In millions,     |   
|                   |  | except for rates) |   
|Income taxes       |  | $                 | 20 |   |      | $ | 23 |  
|Effective tax rate |  |                   | 31 | % |      |   | 31 | %



Liquidity and Capital Expenditures


Liquidity Overview




9



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##### Table of Contents





Capital Expenditures






|          |       |                                       |    |                        |               |   |   |           |  |      |           |     |                |          |     |      |  |   |    |    | 
|--------- | ----- | ------------------------------------- | -- | ---------------------- | ------------- | - | - | --------- |  | ---- | --------- | --- | -------------- | -------- | --- | ---- |  | - | -- | -- | 
|          |       |                                       |    | Estimated Future Costs |               |   |   |           | 
|          |       | Total Costs                           |    |                        |               |   |   | Estimated |  |      | Insurance |    
|          |       | Incurred as of                        |    |                        | Operation and |   |   |           |  | Cost |           |     | Reimbursements |         
|Hurricane |       | March 31, 2006                        |    |                        | Maintenance   |   |   | Capital   |  |      | Recovery  |     |                | Received |    
|          |       |                                       |    |                        |               |   |   |           |  |      |           |     |                |          |    
|          |       | (In millions, except for percentages) |   
|Ivan      |       | $                                     | 69 |                        |               | $ |  |           |  | $    |          |     |                |          | 100 | %    |  | $ | 56 |   
|Katrina   |       |                                       | 76 |                        |               |   | 9 |           |  |      | 55        | (1) |                |          | 37  | %(2) |  |   |   |   
|          |       |                                       |    |                        |               |   |   |           |  |      |           |     |                |          |    
|          | Total |                                       | $  | 145                    |               |   | $ | 9         |  |      | $         | 55  |                |          |     |      |  |   | $  | 56 | 
|          |       |                                       |    |                        |               |   |   |           |  |      |           |     |                |          |    






|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(1) | Includes $3 million of related improvements.                                                 
|   
|(2) | During the quarter ended March 31, 2006, our estimated
    insurance recoveries were reduced.



Commitments and Contingencies









|        |                                                           
|------- | ----------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures About Market Risk

10-Q.







|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures




10



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##### Table of Contents





Changes in Internal Control Over Financial Reporting




11



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##### Table of Contents






PART II  OTHER INFORMATION







|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings








|         |             
|-------- | ------------
|Item 1A. | Risk Factors




CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE
HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995


forward-looking forward-looking forward-looking forward-looking forward-looking


10-K.







|        |                                                                
|------- | ---------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity Securities and Use of
    Proceeds

10-Q.







|        |                                
|------- | -------------------------------
|Item 3. | Defaults Upon Senior Securities

10-Q.







|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders

10-Q.







|        |                  
|------- | -----------------
|Item 5. | Other Information



12



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##### Table of Contents








|        |         
|------- | --------
|Item 6. | Exhibits



|        |     |             |  |                                                                                                        
|------- | --- | ----------- |  | -------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | *31 | .A          |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.
|        | *31 | .B          |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.
|        | *32 | .A          |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.
|        | *32 | .B          |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.

Undertaking


S-K,


13



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##### Table of Contents






SIGNATURES






| |                             
| | ----------------------------
| | SOUTHERN NATURAL GAS COMPANY




| |                                    
| | -----------------------------------
| | /s/ JAMES C. YARDLEY               
| |                                    
| | James C. Yardley                   
| | Chairman of the Board and President
| | (Principal Executive Officer)      




| |                                             
| | --------------------------------------------
| | /s/ JOHN R. SULT                            
| |                                             
| | John R. Sult                                
| | Senior Vice President,                      
| | Chief Financial Officer and Controller      
| | (Principal Accounting and Financial Officer)

14



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##### Table of Contents



SOUTHERN NATURAL GAS COMPANY


EXHIBIT INDEX




|        |     |             |  |                                                                                                        
|------- | --- | ----------- |  | -------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | *31 | .A          |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.
|        | *31 | .B          |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.
|        | *32 | .A          |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.
|        | *32 | .B          |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.