##### Table of Contents


















Form 10-Q




[X]


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2005


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




|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|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)

(713) 420-2600


þ o


o þ


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.










---

TABLE OF CONTENTS



|                                                                     |  |  |  |  |  |  |  | 
|-------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I -- FINANCIAL INFORMATION                                     
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|CONDENSED CONSOLIDATED BALANCE SHEETS                               
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|PART II -- OTHER INFORMATION                                        
|SIGNATURES                                                          
|Certification of PEO Pursuant to Section 302                        
|Certification of CFO Pursuant to Section 302                        
|Certification of PEO Pursuant to Section 906                        
|Certification of CFO Pursuant to Section 906                        



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##### Table of Contents



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                                          |  |      | 9  | 
|        |  | Cautionary Statements for Purposes of the Safe
    Harbor Provisions of the Private Securities Litigation
    Reform Act of 1995 |  |      | 13 | 
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                                                         |  |      | *  | 
|Item 4. |  | Controls and Procedures                                                                                                            |  |      | 13 | 
|        |  | PART II  Other Information                                                                                                        |  |      |    | 
|Item 1. |  | Legal Proceedings                                                                                                                  |  |      | 15 | 
|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                                                                                                                  |  |      | 15 | 
|Item 6. |  | Exhibits                                                                                                                           |  |      | 15 | 
|        |  | Signatures                                                                                                                         |  |      | 16 | 






|  |                                                                                                                                                                                               
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | 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                      
|BBtu |  | = billion British thermal units
|Bcf  |  | = billion cubic feet           
|Mcf  |  | = thousand cubic feet          
|MMcf |  | = million cubic feet           





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PART I  FINANCIAL INFORMATION




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

SOUTHERN NATURAL GAS COMPANY







CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND


COMPREHENSIVE INCOME


(In millions)


(Unaudited)


|                                        |                                          |               |     |             |               |   |     |      |  |   |      |     |   |   |     |     | 
|--------------------------------------- | ---------------------------------------- | ------------- | --- | ----------- | ------------- | - | --- | ---- |  | - | ---- | --- | - | - | --- | --- | 
|                                        |                                          |               |     | Nine Months |              
|                                        |                                          | Quarter Ended |     |             | Ended         |  
|                                        |                                          | September 30, |     |             | September 30, |  
|                                        |                                          |               |     |             |               |  
|                                        |                                          | 2005          |     |             | 2004          |   |     | 2005 |  |   | 2004 |    
|                                        |                                          |               |     |             |               |   |     |      |  |   |      |    
|Operating revenues                      |                                          | $             | 116 |             |               | $ | 121 |      |  | $ | 353  |     |   | $ | 367 |    
|                                        |                                          |               |     |             |               |   |     |      |  |   |      |    
|Operating expenses                      |                                          |               |     |             |               |   |     |      |  |   |      |     |   |   |     |    
|                                        | Operation and maintenance                |               |     | 47          |               |   |     | 53   |  |   |      | 123 |   |   |     | 147 | 
|                                        | Depreciation, depletion and amortization |               |     | 12          |               |   |     | 13   |  |   |      | 38  |   |   |     | 38  | 
|                                        | Gain on long-lived assets                |               |     |            |               |   |     |     |  |   |      | (9  | ) |   |     |    | 
|                                        | Taxes, other than income taxes           |               |     | 8           |               |   |     | 7    |  |   |      | 22  |   |   |     | 19  | 
|                                        |                                          |               |     |             |               |   |     |      |  |   |      |    
|                                        |                                          |               | 67  |             |               |   | 73  |      |  |   | 174  |     |   |   | 204 |    
|                                        |                                          |               |     |             |               |   |     |      |  |   |      |    
|Operating income                        |                                          |               | 49  |             |               |   | 48  |      |  |   | 179  |     |   |   | 163 |    
|Earnings from unconsolidated affiliates |                                          |               | 23  |             |               |   | 21  |      |  |   | 63   |     |   |   | 55  |    
|Other income, net                       |                                          |               | 7   |             |               |   | 2   |      |  |   | 17   |     |   |   | 7   |    
|Interest and debt expense               |                                          |               | (23 | )           |               |   | (23 | )    |  |   | (70  | )   |   |   | (70 | )  
|Affiliated interest income, net         |                                          |               | 3   |             |               |   | 1   |      |  |   | 7    |     |   |   | 3   |    
|                                        |                                          |               |     |             |               |   |     |      |  |   |      |    
|Income before income taxes              |                                          |               | 59  |             |               |   | 49  |      |  |   | 196  |     |   |   | 158 |    
|Income taxes                            |                                          |               | 20  |             |               |   | 16  |      |  |   | 62   |     |   |   | 50  |    
|                                        |                                          |               |     |             |               |   |     |      |  |   |      |    
|Net income                              |                                          |               | 39  |             |               |   | 33  |      |  |   | 134  |     |   |   | 108 |    
|Other comprehensive income              |                                          |               | 1   |             |               |   |    |      |  |   | 2    |     |   |   |    |    
|                                        |                                          |               |     |             |               |   |     |      |  |   |      |    
|Comprehensive income                    |                                          | $             | 40  |             |               | $ | 33  |      |  | $ | 136  |     |   | $ | 108 |    
|                                        |                                          |               |     |             |               |   |     |      |  |   |      |    



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SOUTHERN NATURAL GAS COMPANY







CONDENSED CONSOLIDATED BALANCE SHEETS


(In millions, except share amounts)


(Unaudited)


|                                       |                                                                                           |               |                                            |       |              |       |       |       |    |       | 
|-------------------------------------- | ----------------------------------------------------------------------------------------- | ------------- | ------------------------------------------ | ----- | ------------ | ----- | ----- | ----- | -- | ----- | 
|                                       |                                                                                           | September 30, |                                            |       | December 31, |      
|                                       |                                                                                           | 2005          |                                            |       | 2004         |      
|                                       |                                                                                           |               |                                            |       |              |      
|ASSETS                                
|                                      
|Current assets                         |                                                                                           |               |                                            |       |              |       |       |      
|                                       | Cash and cash equivalents                                                                 |               | $                                          |      |              |       | $     |      |   
|                                       | Accounts receivable, net of allowance of $1 in 2005 and $3 in
    2004                    |               |                                            | 45    |              |       |       | 80    |   
|                                       | Materials and supplies                                                                    |               |                                            | 11    |              |       |       | 11    |   
|                                       | Restricted cash                                                                           |               |                                            | 6     |              |       |       |      |   
|                                       | Other                                                                                     |               |                                            | 22    |              |       |       | 9     |   
|                                       |                                                                                           |               |                                            |       |              |      
|                                       |                                                                                           |               | Total current assets                       |       |              | 84    |       |       |    | 100   | 
|                                       |                                                                                           |               |                                            |       |              |      
|Property, plant and equipment, at cost |                                                                                           |               | 3,304                                      |       |              |       | 3,234 |      
|                                       | Less accumulated depreciation, depletion and amortization                                 |               |                                            | 1,327 |              |       |       | 1,344 |   
|                                       |                                                                                           |               |                                            |       |              |      
|                                       |                                                                                           |               | Total property, plant and equipment, net   |       |              | 1,977 |       |       |    | 1,890 | 
|                                       |                                                                                           |               |                                            |       |              |      
|Other assets                           |                                                                                           |               |                                            |       |              |       |       |      
|                                       | Investments in unconsolidated affiliates                                                  |               |                                            | 691   |              |       |       | 740   |   
|                                       | Note receivable from affiliate                                                            |               |                                            | 323   |              |       |       | 171   |   
|                                       | Regulatory assets                                                                         |               |                                            | 46    |              |       |       | 41    |   
|                                       | Other                                                                                     |               |                                            | 11    |              |       |       | 21    |   
|                                       |                                                                                           |               |                                            |       |              |      
|                                       |                                                                                           |               | 1,071                                      |       |              |       | 973   |      
|                                       |                                                                                           |               |                                            |       |              |      
|                                       |                                                                                           |               | Total assets                               |       | $            | 3,132 |       |       | $  | 2,963 | 
|                                       |                                                                                           |               |                                            |       |              |      
|                                      
|LIABILITIES AND STOCKHOLDERS EQUITY  
|                                      
|Current liabilities                    |                                                                                           |               |                                            |       |              |       |       |      
|                                       | Accounts payable                                                                          |               |                                            |       |              |       |       |       |   
|                                       |                                                                                           | Trade         |                                            | $     | 22           |       |       | $     | 36 |      
|                                       |                                                                                           | Affiliates    |                                            |       | 14           |       |       |       | 8  |      
|                                       |                                                                                           | Other         |                                            |       | 4            |       |       |       | 2  |      
|                                       | Taxes payable                                                                             |               |                                            | 95    |              |       |       | 58    |   
|                                       | Accrued interest                                                                          |               |                                            | 10    |              |       |       | 30    |   
|                                       | Contractual deposits                                                                      |               |                                            | 3     |              |       |       | 3     |   
|                                       | Other                                                                                     |               |                                            | 7     |              |       |       | 3     |   
|                                       |                                                                                           |               |                                            |       |              |      
|                                       |                                                                                           |               | Total current liabilities                  |       |              | 155   |       |       |    | 140   | 
|                                       |                                                                                           |               |                                            |       |              |      
|Long-term debt                         |                                                                                           |               | 1,195                                      |       |              |       | 1,195 |      
|                                       |                                                                                           |               |                                            |       |              |      
|Other liabilities                      |                                                                                           |               |                                            |       |              |       |       |      
|                                       | Deferred income taxes                                                                     |               |                                            | 318   |              |       |       | 296   |   
|                                       | Other                                                                                     |               |                                            | 50    |              |       |       | 54    |   
|                                       |                                                                                           |               |                                            |       |              |      
|                                       |                                                                                           |               | 368                                        |       |              |       | 350   |      
|                                       |                                                                                           |               |                                            |       |              |      
|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                                                                         |               |                                            | 1,080 |              |       |       | 946   |   
|                                       | Accumulated other comprehensive loss                                                      |               |                                            | (6    | )            |       |       | (8    | ) 
|                                       |                                                                                           |               |                                            |       |              |      
|                                       |                                                                                           |               | Total stockholders equity                 |       |              | 1,414 |       |       |    | 1,278 | 
|                                       |                                                                                           |               |                                            |       |              |      
|                                       |                                                                                           |               | Total liabilities and stockholders equity |       | $            | 3,132 |       |       | $  | 2,963 | 
|                                       |                                                                                           |               |                                            |       |              |      



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SOUTHERN NATURAL GAS COMPANY







CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)


|                                        |                                                                               |                                                                              |                                           |      |      |      |   |      |     |      |  
|--------------------------------------- | ----------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------- | ---- | ---- | ---- | - | ---- | --- | ---- | -
|                                        |                                                                               | Nine Months Ended                                                            |                                          
|                                        |                                                                               | September 30,                                                                |                                          
|                                        |                                                                               |                                                                              |                                          
|                                        |                                                                               | 2005                                                                         |                                           |      | 2004 |     
|                                        |                                                                               |                                                                              |                                           |      |      |     
|Cash flows from operating activities    |                                                                               |                                                                              |                                           |      |      |      |   |     
|                                        | Net income                                                                    |                                                                              | $                                         | 134  |      |      | $ | 108  |    
|                                        | Adjustments to reconcile net income to net cash from operating
    activities |                                                                              |                                           |      |      |      |   |      |    
|                                        |                                                                               | Depreciation, depletion and amortization                                     |                                           |      | 38   |      |   |      | 38  |     
|                                        |                                                                               | Deferred income taxes                                                        |                                           |      | 22   |      |   |      | 15  |     
|                                        |                                                                               | Gain on long-lived assets                                                    |                                           |      | (9   | )    |   |      |    |     
|                                        |                                                                               | Earnings from unconsolidated affiliates, adjusted for cash
    distributions |                                           |      | 50   |      |   |      | (55 | )   
|                                        |                                                                               | Other non-cash income items                                                  |                                           |      | (5   | )    |   |      | (3  | )   
|                                        |                                                                               | Asset and liability changes                                                  |                                           |      | 24   |      |   |      | 11  |     
|                                        |                                                                               |                                                                              |                                           |      |      |     
|                                        |                                                                               |                                                                              | Net cash provided by operating activities |      |      | 254  |   |      |     | 114  |  
|                                        |                                                                               |                                                                              |                                           |      |      |     
|Cash flows from investing activities    |                                                                               |                                                                              |                                           |      |      |      |   |     
|                                        | Additions to property, plant and equipment                                    |                                                                              |                                           | (137 | )    |      |   | (132 | )  
|                                        | Proceeds from the sale of assets                                              |                                                                              |                                           | 32   |      |      |   | 4    |    
|                                        | Net change in affiliate advances                                              |                                                                              |                                           | (152 | )    |      |   | 21   |    
|                                        | Net change in restricted cash                                                 |                                                                              |                                           | 4    |      |      |   | (3   | )  
|                                        | Other                                                                         |                                                                              |                                           | (1   | )    |      |   | (4   | )  
|                                        |                                                                               |                                                                              |                                           |      |      |     
|                                        |                                                                               |                                                                              | Net cash used in investing activities     |      |      | (254 | ) |      |     | (114 | )
|                                        |                                                                               |                                                                              |                                           |      |      |     
|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






| |                                               
| | ----------------------------------------------
| | Revision of Prior Period Financial Information





| |                                                         
| | --------------------------------------------------------
| | New Accounting Pronouncements Issued But Not Yet Adopted



Accounting for Asset Retirement Obligations. Accounting for
Conditional Asset Retirement Obligations Accounting for Asset
Retirement Obligations


Accounting for Pipeline Integrity Costs.


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2. Debt and Credit Facilities


Debt




Credit Facilities




3. Commitments and Contingencies


Legal Proceedings


Grynberg. In re: Natural Gas Royalties Qui Tam
Litigation


Royalty Claim.






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Environmental Matters




|                              |  |   |   | 
|----------------------------- |  | - | - | 
|Balance at January 1, 2005    |  | $ |  | 
|Other changes, net            |  |   | 1 | 
|                              |  |   |  
|Balance at September 30, 2005 |  | $ | 1 | 
|                              |  |   |  







| |                   
| | ------------------
| | Rate Investigation





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

Duke Litigation.


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4. Investments in Unconsolidated Affiliates and
Transactions with Affiliates


Investments in Unconsolidated
Affiliates




|                        |                                   |               |   |             |               |  |   |      |  |  |      |     |  |  |   |     | 
|----------------------- | --------------------------------- | ------------- | - | ----------- | ------------- |  | - | ---- |  |  | ---- | --- |  |  | - | --- | 
|                        |                                   |               |   | Nine Months |              
|                        |                                   | Quarter Ended |   |             | Ended         | 
|                        |                                   | September 30, |   |             | September 30, | 
|                        |                                   |               |   |             |               | 
|                        |                                   | 2005          |   |             | 2004          |  |   | 2005 |  |  | 2004 |    
|                        |                                   |               |   |             |               |  |   |      |  |  |      |    
|                        |                                   | (In millions) |  
|Operating results data: |                                   |               |   |             |               |  |   |      |  |  |      |     |  |  |   |    
|                        | Operating revenues                |               | $ | 70          |               |  | $ | 68   |  |  | $    | 194 |  |  | $ | 191 | 
|                        | Operating expenses                |               |   | 28          |               |  |   | 24   |  |  |      | 80  |  |  |   | 75  | 
|                        | Income from continuing operations |               |   | 22          |               |  |   | 22   |  |  |      | 59  |  |  |   | 54  | 
|                        | Net
    income(1)                 |               |   | 22          |               |  |   | 22   |  |  |      | 59  |  |  |   | 56  | 




|    |                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.



|                        |                                   |               |   |             |               |  |   |      |  |  |      |     |  |  |   |     | 
|----------------------- | --------------------------------- | ------------- | - | ----------- | ------------- |  | - | ---- |  |  | ---- | --- |  |  | - | --- | 
|                        |                                   |               |   | Nine Months |              
|                        |                                   | Quarter Ended |   |             | Ended         | 
|                        |                                   | September 30, |   |             | September 30, | 
|                        |                                   |               |   |             |               | 
|                        |                                   | 2005          |   |             | 2004          |  |   | 2005 |  |  | 2004 |    
|                        |                                   |               |   |             |               |  |   |      |  |  |      |    
|                        |                                   | (In millions) |  
|Operating results data: |                                   |               |   |             |               |  |   |      |  |  |      |     |  |  |   |    
|                        | Operating revenues                |               | $ | 66          |               |  | $ | 64   |  |  | $    | 181 |  |  | $ | 178 | 
|                        | Operating expenses                |               |   | 27          |               |  |   | 21   |  |  |      | 75  |  |  |   | 69  | 
|                        | Income from continuing operations |               |   | 19          |               |  |   | 18   |  |  |      | 49  |  |  |   | 44  | 
|                        | Net
    income(1)                 |               |   | 19          |               |  |   | 18   |  |  |      | 49  |  |  |   | 46  | 




|    |                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The difference between our proportionate share of our equity
    investments, net income and our earnings from
    unconsolidated affiliate 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 investment.



7



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Transactions with Affiliates


Cash Management Program.


Taxes.


Other Affiliate Balances.


|                     |  |               |   |  |              |   |   | 
|-------------------- |  | ------------- | - |  | ------------ | - | - | 
|                     |  | September 30, |   |  | December 31, |  
|                     |  | 2005          |   |  | 2004         |  
|                     |  |               |   |  |              |  
|                     |  | (In millions) |  
|Contractual deposits |  | $             | 1 |  |              | $ | 1 | 



Affiliate Revenues and Expenses.


|                                                    |  |               |    |  |                   |   |    |      |  |   |      |  |  |   |    | 
|--------------------------------------------------- |  | ------------- | -- |  | ----------------- | - | -- | ---- |  | - | ---- |  |  | - | -- | 
|                                                    |  | Quarter Ended |    |  | Nine Months Ended |  
|                                                    |  | September 30, |    |  | September 30,     |  
|                                                    |  |               |    |  |                   |  
|                                                    |  | 2005          |    |  | 2004              |   |    | 2005 |  |   | 2004 | 
|                                                    |  |               |    |  |                   |   |    |      |  |   |      | 
|                                                    |  | (In millions) |   
|Revenues from affiliates                            |  | $             | 2  |  |                   | $ | 2  |      |  | $ | 5    |  |  | $ | 8  | 
|Operations and maintenance expenses from affiliates |  |               | 17 |  |                   |   | 13 |      |  |   | 42   |  |  |   | 34 | 

8



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



Results of Operations




|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |     |  |   |       |     | 
|--------------------------------------- | ---------------- | ------------------------------------ | ----- | -- | ----------------- | - | ----- | ---- |  | - | ----- | --- |  | - | ----- | --- | 
|                                        |                  | Quarter Ended                        |       |    | Nine Months Ended |  
|                                        |                  | September 30,                        |       |    | September 30,     |  
|                                        |                  |                                      |       |    |                   |  
|                                        |                  | 2005                                 |       |    | 2004              |   |       | 2005 |  |   | 2004  |    
|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |    
|                                        |                  | (In millions, except volume amounts) |      
|Operating revenues                      |                  | $                                    | 116   |    |                   | $ | 121   |      |  | $ | 353   |     |  | $ | 367   |    
|Operating expenses                      |                  |                                      | (67   | )  |                   |   | (73   | )    |  |   | (174  | )   |  |   | (204  | )  
|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |    
|                                        | Operating income |                                      |       | 49 |                   |   |       | 48   |  |   |       | 179 |  |   |       | 163 | 
|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |    
|Earnings from unconsolidated affiliates |                  |                                      | 23    |    |                   |   | 21    |      |  |   | 63    |     |  |   | 55    |    
|Other income, net                       |                  |                                      | 7     |    |                   |   | 2     |      |  |   | 17    |     |  |   | 7     |    
|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |    
|                                        | Other            |                                      |       | 30 |                   |   |       | 23   |  |   |       | 80  |  |   |       | 62  | 
|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |    
|                                        | EBIT             |                                      |       | 79 |                   |   |       | 71   |  |   |       | 259 |  |   |       | 225 | 
|Interest and debt expense               |                  |                                      | (23   | )  |                   |   | (23   | )    |  |   | (70   | )   |  |   | (70   | )  
|Affiliated interest income, net         |                  |                                      | 3     |    |                   |   | 1     |      |  |   | 7     |     |  |   | 3     |    
|Income taxes                            |                  |                                      | (20   | )  |                   |   | (16   | )    |  |   | (62   | )   |  |   | (50   | )  
|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |    
|                                        | Net income       |                                      | $     | 39 |                   |   | $     | 33   |  |   | $     | 134 |  |   | $     | 108 | 
|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |    
|Throughput volumes
    (BBtu/d)(1)      |                  |                                      | 3,085 |    |                   |   | 3,103 |      |  |   | 2,990 |     |  |   | 3,225 |    
|                                        |                  |                                      |       |    |                   |   |       |      |  |   |       |    






|    |                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

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|                                                       |                      |                         |    |      |                   |   |    |       |      |   |        |   |  |         |   |   |         |   |     |       |   |   |        |    |  |   |    |    |  |   |    |    | 
|------------------------------------------------------ | -------------------- | ----------------------- | -- | ---- | ----------------- | - | -- | ----- | ---- | - | ------ | - |  | ------- | - | - | ------- | - | --- | ----- | - | - | ------ | -- |  | - | -- | -- |  | - | -- | -- | 
|                                                       |                      | Quarter Ended           |    |      | Nine Months Ended |  
|                                                       |                      | September 30,           |    |      | September 30,     |  
|                                                       |                      |                         |    |      |                   |  
|                                                       |                      |                         |    | EBIT |                   |   |    |       | EBIT |  
|                                                       |                      | Revenue                 |    |      | Expense           |   |    | Other |      |   | Impact |   |  | Revenue |   |   | Expense |   |     | Other |   |   | Impact |   
|                                                       |                      |                         |    |      |                   |   |    |       |      |   |        |   |  |         |   |   |         |   |     |       |   |   |        |   
|                                                       |                      | Favorable/(Unfavorable) |   
|                                                       |                      | (In millions)           |   
|Mainline expansions                                    |                      | $                       | 2  |      |                   | $ |   |       |      | $ | (2     | ) |  | $       |  |   |         | $ | 11  |       |   | $ | (1     | )  |  | $ | (3 | )  |  | $ | 7  |   
|Gas not used in operations and other natural gas sales |                      |                         | (8 | )    |                   |   | 8  |       |      |   |       |   |  |         |  |   |         |   | (26 | )     |   |   | 33     |    |  |   |   |    |  |   | 7  |   
|Higher allocation of overhead costs from affiliates    |                      |                         |   |      |                   |   |   |       |      |   |       |   |  |         |  |   |         |   |    |       |   |   | (7     | )  |  |   |   |    |  |   | (7 | ) 
|Gain on the sale of assets in 2005                     |                      |                         |   |      |                   |   |   |       |      |   |       |   |  |         |  |   |         |   |    |       |   |   | 9      |    |  |   |   |    |  |   | 9  |   
|Earnings from our equity investment in Citrus          |                      |                         |   |      |                   |   |   |       |      |   | 1      |   |  |         | 1 |   |         |   |    |       |   |   |       |    |  |   | 6  |    |  |   | 6  |   
|Elba Island expansion                                  |                      |                         |   |      |                   |   |   |       |      |   | 3      |   |  |         | 3 |   |         |   |    |       |   |   |       |    |  |   | 7  |    |  |   | 7  |   
|Other(1)                                               |                      |                         | 1  |      |                   |   | (2 | )     |      |   | 5      |   |  |         | 4 |   |         |   | 1   |       |   |   | (4     | )  |  |   | 8  |    |  |   | 5  |   
|                                                       |                      |                         |    |      |                   |   |    |       |      |   |        |   |  |         |   |   |         |   |     |       |   |   |        |   
|                                                       | Total impact on EBIT |                         | $  | (5   | )                 |   | $  | 6     |      |   | $      | 7 |  |         | $ | 8 |         |   | $   | (14   | ) |   | $      | 30 |  |   | $  | 18 |  |   | $  | 34 | 
|                                                       |                      |                         |    |      |                   |   |    |       |      |   |        |   |  |         |   |   |         |   |     |       |   |   |        |   






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



Mainline Expansions.


Gas Not Used in Operations and Other Natural Gas Sales.


Allocated Costs.


Gain on the Sale of Assets.


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Citrus.


Elba Island Expansion.


Accounting for Pipeline Integrity Costs.


Other.


Affiliated Interest Income, Net




| |                                                  
| | -------------------------------------------------
| | Third Quarter 2005 Compared to Third Quarter 2004





| |                                                          
| | ---------------------------------------------------------
| | Nine Months Ended 2005 Compared to Nine Months Ended 2004



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Income Taxes


|                   |  |                                 |    |             |               |   |    |      |  |   |      |   |  |   |    |  
|------------------ |  | ------------------------------- | -- | ----------- | ------------- | - | -- | ---- |  | - | ---- | - |  | - | -- | -
|                   |  |                                 |    | Nine Months |              
|                   |  | Quarter Ended                   |    |             | Ended         |  
|                   |  | September 30,                   |    |             | September 30, |  
|                   |  |                                 |    |             |               |  
|                   |  | 2005                            |    |             | 2004          |   |    | 2005 |  |   | 2004 |  
|                   |  |                                 |    |             |               |   |    |      |  |   |      |  
|                   |  | (In millions, except for rates) |   
|Income taxes       |  | $                               | 20 |             |               | $ | 16 |      |  | $ | 62   |   |  | $ | 50 |  
|Effective tax rate |  |                                 | 34 | %           |               |   | 33 | %    |  |   | 32   | % |  |   | 32 | %



Liquidity




Capital Expenditures






Commitments and Contingencies




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##### Table of Contents



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








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





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

Material Weaknesses Previously Disclosed




Evaluation of Disclosure Controls and Procedures




Changes in Internal Control Over Financial Reporting






| |   |                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Implemented automated and manual controls for our primary
    financial system to monitor unauthorized password changes;                                                                                                                                  
|
| |  | Performed an in-depth analysis of our primary financial
    accounting system to examine existing functional access to
    identify any potentially incompatible duties and developed an
    enhanced segregation of duties matrix based on this analysis;
|
| |  | Modified our primary financial accounting system to eliminate or
    modify potentially conflicting functionality;                                                                                                                                        

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| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Implemented a process to evaluate all new user access requests
    against segregation of duties matrices to ensure no new
    conflicts are created for our applications described above;                                                                             
|
| |  | Separated security administration rights from system update
    capabilities for our applications described above;                                                                                                                                                     
|
| |  | Implemented monitoring procedures to monitor activities of
    security administration roles for our applications described
    above;                                                                                                                                 
|
| |  | Formalized, issued and implemented various accounting policies
    including an accounting policy that requires a higher level of
    review of non-routine transactions; and                                                                                          
|
| |  | Developed and improved processes to ensure adequate
    communication between commercial and accounting personnel to
    allow for the complete and timely identification, communication
    and review of information required to record non-routine
    transactions.





| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | Conducted training on company-wide accounting policies;                                 
|
| |  | Improved our procedures for managing information systems
    changes; and               
|
| |  | Enhanced the automated controls over the preparation and posting
    of journal entries.



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##### Table of Contents






PART II  OTHER INFORMATION




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





|        |                                                                
|------- | ---------------------------------------------------------------
|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





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



| |  |         |      |             |  |                                                                                                            
| |  | ------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------------
| |  | Exhibit |      |            
| |  | Number  |      | Description
| |  |         |      |            
| |  |         | *31  | .A          |  | Certification of Principal 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 Principal 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.    





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We hereby undertake, pursuant to Regulation S-K,
    Item 601(b), paragraph (4)(iii), to furnish to the
    U.S. Securities and Exchange Commission, upon request, all
    constituent instruments defining the rights of holders of our
    long-term debt not filed herewith for the reason that the total
    amount of securities authorized under any of such instruments
    does not exceed 10 percent of our total consolidated assets.

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SIGNATURES






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




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




| |                                             
| | --------------------------------------------
| | /s/ GREG G. GRUBER                          
| |                                             
| | Greg G. Gruber                              
| | Senior Vice President,                      
| | Chief Financial Officer and Treasurer       
| | (Principal Financial and Accounting Officer)

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SOUTHERN NATURAL GAS COMPANY


EXHIBIT INDEX




|        |      |             |  |                                                                                                            
|------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | *31  | .A          |  | Certification of Principal 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 Principal 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.