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

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

For the quarterly period ended     September 30, 1999

                                       OR

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

For the transition period from                        to

Commission file number      1-2745

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

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

                  El Paso Energy Building
                   1001 Louisiana Street
                      Houston, Texas                            77002
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number:                             (713) 420-2131

                               AmSouth-Sonat Tower
                            Birmingham, Alabama 35203
(Former name, former address and former fiscal year, if changed since last
report)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                   Yes X No _

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

                         COMMON STOCK, $3.75 PAR VALUE:

                  1,000 SHARES OUTSTANDING ON OCTOBER 31, 1999

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


<PAGE>


                  SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                              Page No.

PART I.       Financial Information

              Item 1.      Financial Statements

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

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

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

                           Notes to Condensed Consolidated Financial
                              Statements (Unaudited)                                                           4 - 7

              Item 2.      Management's Discussion and Analysis of
                              Financial Condition and Results of
                              Operations                                                                       8 - 16

              Item 3.      Quantitative and Qualitative Disclosure About
                              Market Risk                                                                     17

PART II.      Other Information

              Item 5.      Legal Proceedings                                                                  18

              Item 6.      Exhibits and Reports on Form 8-K                                                   18
</TABLE>




<PAGE>


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

<TABLE>
<CAPTION>
                                                                                September 30,            December 31,
                                                                                    1999                     1998
                                                                                            (In Thousands)
                                     ASSETS
Current Assets:
<S>                                                                                <C>                       <C>
    Cash                                                                           $       23                $      107
    Notes receivable from affiliates                                                   45,040                    67,329
    Accounts receivable                                                                84,187                    72,692
    Inventories                                                                        19,557                    20,190
    Gas imbalance receivables                                                           9,863                     5,675
    Other                                                                               2,817                       232
                                                                                   ----------                ----------
          Total Current Assets                                                        161,487                   166,225
                                                                                   ----------                ----------

Investments in Unconsolidated Affiliates and Other                                    168,602                   154,743
                                                                                   ----------                ----------

Plant, Property and Equipment                                                       2,770,460                 2,672,225
    Less accumulated depreciation and amortization                                  1,548,694                 1,533,990
                                                                                   ----------                ----------
                                                                                    1,221,766                 1,138,235
                                                                                   ----------                ----------

Deferred Charges and Other                                                            110,974                   106,924
                                                                                   ----------                ----------
                                                                                   $1,662,829                $1,566,127
                                                                                   ==========                ==========

                      LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities:
    Long-term debt due within one year                                             $      206                $    5,000
    Notes to affiliates                                                                24,214                     -
    Accounts payable                                                                   22,735                    25,463
    Accrued income taxes                                                                4,792                     3,123
    Other accrued taxes                                                                16,543                     4,782
    Accrued interest                                                                   21,681                    23,688
    Gas imbalance payables                                                             16,742                     9,231
    Other                                                                               9,741                    11,082
                                                                                   ----------                ----------
          Total Current Liabilities                                                   116,654                    82,369
                                                                                   ----------                ----------

Long-Term Debt                                                                        500,234                   500,000
                                                                                   ----------                ----------

Deferred Credits and Other:
    Deferred income taxes                                                             180,071                   164,482
    Other                                                                              59,010                    57,531
                                                                                   ----------                ----------
                                                                                      239,081                   222,013
                                                                                   ----------                ----------

Commitments and Contingencies

Stockholder's Equity:
    Common stock and other capital                                                     79,797                    79,722
    Retained earnings                                                                 727,063                   682,023
                                                                                   ----------                ----------
          Total Stockholder's Equity                                                  806,860                   761,745
                                                                                   ----------                ----------

                                                                                   $1,662,829                $1,566,127
                                                                                   ==========                ==========
</TABLE>

                             See accompanying notes.

<PAGE>

                  SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      Three Months                        Nine Months
                                                                    Ended September 30,                Ended September 30,
                                                              1999               1998           1999                1998
                                                                                     (In Thousands)
Revenues:
<S>                                                            <C>               <C>              <C>              <C>
    Transportation and storage                                 $ 90,942          $88,822          $278,221         $273,918
    Other                                                         4,423            4,527           13,034            20,432
                                                               --------          -------         --------          --------
                                                                 95,365           93,349           291,255          294,350
                                                               --------          -------          --------         --------

Costs and Expenses:
    Operating and maintenance                                    33,594           21,054            71,628           59,649
    General and administrative                                   20,598           14,812            52,159           42,510
    Depreciation and amortization                                15,307           13,647            44,252           32,186
    Taxes, other than income                                      5,683            5,335            17,345           16,055
                                                               --------          -------          --------         --------
                                                                 75,182           54,848           185,384          150,400
                                                               --------          -------          --------         --------

Operating Income                                                 20,183           38,501           105,871          143,950

Other Income, Net:
    Equity in earnings of
       unconsolidated affiliates                                  2,694            5,938             7,544           15,675
    Other, net                                                    2,327            2,002             5,262            3,749
                                                               --------          -------          --------         --------
                                                                  5,021            7,940            12,806           19,424
                                                               --------          -------          --------         --------

Earnings Before Interest and Taxes                               25,204           46,441           118,677          163,374

Interest:
    Interest income, primarily
       from affiliates                                              990              269             3,096            2,838
    Interest expense                                             (9,758)          (9,210)          (29,573)         (27,485)
    Interest capitalized                                            698              850             1,631            1,816
                                                               --------          -------          --------         --------
                                                                 (8,070)          (8,091)          (24,846)         (22,831)
                                                               --------          -------          --------         --------

Income before Income Taxes                                       17,134           38,350            93,831          140,543

Income Tax Expense                                                6,644           14,599            36,391           53,944
                                                               --------          -------          --------         --------

Net Income                                                     $ 10,490          $23,751          $ 57,440         $ 86,599
                                                               ========          =======          ========         ========
</TABLE>















                             See accompanying notes.

<PAGE>

                  SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                               Nine Months
                                                                                          Ended September 30,
                                                                                     1999                       1998
                                                                                             (In Thousands)
Cash Flows from Operating Activities:
<S>                                                                                 <C>                       <C>
    Net income                                                                      $  57,440                 $  86,599
    Adjustments to reconcile net income to net
       cash provided by operating activities:
          Depreciation and amortization                                                44,252                    32,186
          Deferred income taxes                                                        15,590                    21,676
          Equity in earnings of unconsolidated
              affiliates, less distributions                                           (1,294)                  (12,175)
          Reserves for regulatory matters                                                (194)                   (4,431)
          Change in working capital                                                    (2,770)                   (2,560)
          Other                                                                        13,391                   (12,766)
                                                                                    ---------                 ---------
              Net cash provided by operating
                 activities                                                           126,415                   108,529
                                                                                    ---------                 ---------

Cash Flows from Investing Activities:
    Plant, property and equipment additions                                          (145,351)                 (160,297)
    Notes receivable from affiliates                                                   22,289                    25,895
    Investments in unconsolidated affiliates and other                                (10,691)                  (70,657)
                                                                                    ---------                 ---------
              Net cash used in investing activities                                  (133,753)                 (205,059)
                                                                                    ---------                 ---------

Cash Flows from Financing Activities:
    Proceeds from issuance of long-term debt                                             -                      100,000
    Payments of long-term debt                                                         (4,560)                   (6,220)
    Changes in short-term borrowings from affiliates                                   24,214                      -
    Dividends paid                                                                    (12,400)                     -
                                                                                    ---------                 ---------
              Net cash provided by financing activities                                 7,254                    93,780
                                                                                    ---------                 ---------

Net Decrease in Cash                                                                      (84)                   (2,750)

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

Cash at End of Period                                                               $      23                 $     155
                                                                                    =========                 =========

Supplemental Disclosures of Cash Flow Information
Cash Paid for:
    Interest (net of amount capitalized)                                            $  29,024                 $  23,705
    Income taxes paid, net                                                             19,057                    29,119
</TABLE>













                             See accompanying notes.


<PAGE>


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

1.       Basis of Presentation

         Southern  Natural  Gas  Company   (Southern)   became  a  wholly  owned
subsidiary of El Paso Energy  Corporation (El Paso Energy) effective October 25,
1999.  Prior to this date,  Southern was a wholly owned subsidiary of Sonat Inc.
(Sonat).

         In  connection  with the  merger  of its  parent,  Sonat,  with El Paso
Energy,  Southern has been  required by the Federal  Trade  Commission  (FTC) to
divest its wholly owned  subsidiary,  Sea Robin Pipeline Company (Sea Robin) and
its  one-third  interest in Destin  Pipeline  Company,  L.L.C.  (Destin).  These
divestitures  are expected to be  completed  by the end of the first  quarter of
2000, and are not material to Southern's operations.

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

         Certain amounts in the 1998 condensed consolidated financial statements
and notes have been reclassified to conform with the 1999 presentation.

2.       Unconsolidated Affiliates

         Southern  owns  a  one-third  interest in  Destin  and a subsidiary  of
Southern owns 50 percent of Bear Creek Storage Company (Bear Creek).

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

<TABLE>
<CAPTION>
                                                                     Three Months                       Nine Months
                                                                 Ended September 30,                Ended September 30,
                                                                 -------------------                -------------------
                                                           1999             1998              1999              1998
                                                           ----             ----              ----              ----
                                                                                (In Thousands)

<S>                                                        <C>               <C>              <C>               <C>
Revenues                                                   $8,995            $8,882           $27,018           $26,732
Expenses:
    Operating expenses                                      1,071             1,533             3,332             5,286
    Depreciation                                            1,366             1,361             4,090             4,080
    Other expenses, net                                       972             1,112             2,880             3,420
                                                           ------            ------            ------           -------

Income Reported                                            $5,586            $4,876           $16,716           $13,946
                                                           ======            ======           =======           =======
</TABLE>




<PAGE>

2.       Unconsolidated Affiliates (Cont'd)

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

<TABLE>
<CAPTION>
                                                                     Three Months                       Nine Months
                                                                 Ended September 30,                Ended September 30,
                                                                 -------------------                -------------------
                                                           1999             1998              1999              1998
                                                           ----             ----              ----              ----
                                                                                (In Thousands)

<S>                                                        <C>              <C>               <C>              <C>
Revenues                                                   $8,766           $ 3,632           $18,692          $  8,425
Expenses:
    Operating expenses                                      1,606               222             4,985               222
    Depreciation                                            4,732                95             9,547                95
    Interest and other                                      2,631            (6,829)            6,527           (17,437)
                                                           ------           -------           -------          --------

Income (Loss) Reported                                     $ (203)          $10,144           $(2,367)         $ 25,545
                                                           ======           =======           =======          ========
</TABLE>

3.       Debt and Notes To and From Affiliates

         As part of Sonat's cash management program, Southern  could either loan
funds to or borrow funds from Sonat.  Notes  receivable  and payable were in the
form of demand notes with rates reflecting Sonat's return on funds loaned to its
subsidiaries, average short-term investment rates and cost of borrowed funds. In
certain  circumstances,  these  notes were  subordinated  in right of payment to
amounts payable by Sonat under certain  long-term credit  agreements.  As of the
date of the merger  described in Note 1, a similar program was established  with
El Paso Energy.

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

4.       Rate Matters and Contingencies

         In August 1999  Southern  filed a $17 million  rate  increase  with the
Federal Energy Regulatory Commission (FERC) based on system costs and throughput
during  the base  period  ended  April 30,  1999.  The  filing  complies  with a
moratorium  provision  contained in a comprehensive rate settlement  approved by
the FERC in September 1995 that required Southern to file a general rate case no
earlier  than March 1,  1998,  and no later than  September  1, 1999.  A primary
reason for the proposed rate  increase is an increase in rate base  attributable
to non-expansion  capital  expenditures for facilities that have entered or will
enter into service before the end of the test period on January 31, 2000.



<PAGE>


4.       Rate Matters and Contingencies (Cont'd)

         In  the   filing,   Southern   proposed   to   continue   to  use   the
straight-fixed-variable  rate design method, zone of delivery  reservation rates
calculated   with   reference  to  current  zonal   boundaries,   derivation  of
interruptible  transportation  rates  based on firm  rates at 100  percent  load
factor (using a zone matrix methodology),  and allocation of total storage costs
between pipeline transportation services and unbundled storage services based on
the so-called Equitable methodology.  In addition,  Southern proposed to roll in
the costs of certain  expansion  facilities,  reduce the depreciation  rates for
offshore transmission and underground storage plant, reduce the load factor used
in deriving small shipper rates, and remove certain tariff  provisions that have
expired or become obsolete.

         A number of customers and other  parties  filed  protests to Southern's
rate increase. The most frequent protests involve the potential for reduction in
rates  because of the El Paso/Sonat  merger,  the  reasonableness  of Southern's
filed return on common  equity,  and the rolled-in  rate  treatment of the North
Alabama  Pipeline  Project.  On  September  29,  1999,  the FERC issued an order
setting most issues for hearing and suspending  Southern's  filed rates for five
months,  until  March 1, 2000.  In its order,  the FERC also held that  Southern
retained  the  presumption  of roll-in for the North  Alabama  Pipeline  Project
because  the rate  impact  remained  below five  percent  despite  capital  cost
overruns during construction.

         SFAS No. 71, Accounting for the Effects of Certain Types of Regulation,
provides  that  rate-regulated  entities  account  for  and  report  assets  and
liabilities  consistent with the economic effect of the way in which  regulators
establish  rates,  if the rates  established  are  designed to recover  costs of
providing  the regulated  service and if the  competitive  environment  makes it
reasonable to assume such rates can be charged and collected.  Certain  expenses
and  credits  subject to rate  determination  normally  reflected  in income are
deferred  in the  balance  sheet and are  recognized  in  income as the  related
amounts  are  included  in  service  rates and  recovered  from or  refunded  to
customers. Information regarding Southern's regulatory assets and liabilities is
shown below:
<TABLE>
<CAPTION>
                                                                             September 30,             December 31,
                                                                                  1999                     1998
                                                                                       (In Thousands)
    Regulatory Assets:
    <S>                                                                        <C>                     <C>
       SFAS No. 109 Tax Gross-Up                                                $26,075                 $23,319
       Unrecovered Depreciation,                                                 14,121                  14,053
       Work Force Reduction                                                       3,774                   5,574
       Charitable Donation                                                        6,318                   6,994
       Cash Out Differential                                                      3,825                   4,511
       Other                                                                      7,115                   6,987
                                                                                -------                 -------
                                                                                $61,228                 $61,438
                                                                                =======                 =======

    Regulatory Liabilities:
       Excess Deferred Taxes Due Customers                                      $ 2,568                 $ 3,735
                                                                                =======                 =======
</TABLE>


<PAGE>

4.       Rate Matters and Contingencies (Cont'd)

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





<PAGE>



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

         Southern became a wholly owned  subsidiary of El Paso Energy  effective
October 25, 1999. Prior to this date,  Southern was a wholly owned subsidiary of
Sonat.

         In  connection  with the  merger  of its  parent,  Sonat,  with El Paso
Energy,  Southern  has been  required  by the FTC to  divest  its  wholly  owned
subsidiary,  Sea Robin and its one-third interest in Destin.  These divestitures
are expected to be completed  by the end of the first  quarter of 2000,  and are
not material to Southern's operations.

RESULTS OF OPERATIONS

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

         In December 1997 an affiliate of AGL Resources, Inc. (AGL) and Southern
formed a 50/50 joint venture, Etowah LNG Company, L.L.C. (Etowah), to construct,
own,  and operate a new LNG peaking  facility in Polk County,  Georgia.  Peaking
services  provide  supplemental  gas  supplies  on days when  demand is highest,
typically  during the winter.  The proposed  plant was to connect  directly into
AGL's  principal  natural gas  distribution  subsidiary,  AGLC,  and  Southern's
pipeline. Etowah had planned to provide natural gas storage and peaking services
to AGLC and the City of Austell,  Georgia. AGLC had subscribed for two-thirds of
the anticipated  deliverability capacity from Etowah for a term of 20 years. The
agreement for Etowah to provide services to AGLC included,  however,  provisions
allowing AGLC to terminate  the  agreement if it did not receive a  satisfactory
order  from the  Georgia  Public  Service  Commission  (Georgia  PSC) or if AGLC
otherwise determined it should not proceed with the agreement. In September 1998
the Georgia PSC issued an order approving the agreement, but allowed for further
review of it. At that time the parties  extended  the time period  during  which
AGLC may terminate the agreement and suspended  work on the project.  Etowah has
now given AGLC an extension  until  October 15, 2000,  to make a final  decision
whether to terminate the agreement. If the agreement were terminated, AGLC would
be obligated to reimburse Etowah for all of its costs incurred in the project.

         Units of Shell Oil Company (Shell) and BP Amoco  Corporation (BP Amoco)
are equal  partners  with  Southern in the  ownership  of Destin.  Destin owns a
223-mile,  1  billion  cubic  feet  per  day  interstate  pipeline  system  that
transports  natural gas from the growing eastern Gulf of Mexico production area,
which was placed fully in service in March 1999. An additional 31-mile extension
was  placed  in  service  in May 1999.  Pursuant  to a  settlement  with the FTC
relating  to Sonat's  merger with El Paso  Energy,  El Paso Energy has agreed to
cause Southern to dispose of its interest in Destin.
<PAGE>

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

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

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

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

         The City of Dalton and Atlanta Gas Light Company  (AGLC) filed protests
raising issues  regarding the rates on Southern's  pipeline.  Enron Americas LNG
Company (Enron) challenged the open season conducted by Southern with respect to
the  Elba  Island  reactivation  under  theories  of  undue  discrimination  and
affiliate  preference.  A term sheet  settling  Enron's  protest was executed on
October 13, 1999, and Enron filed a notice of withdrawal of its protest with the
FERC on the same day.  Under the  settlement,  Southern LNG will be obligated to
file a certificate  application to expand vaporization capability and to install
blending facilities following exercise of an option by Enron in 2000.


<PAGE>

         Southern had previously  announced  plans to form a 50/50 joint venture
with  Carolina  Power & Light Company  (CP&L) to  construct,  own, and operate a
natural gas  pipeline,  to be known as the Palmetto  Interstate  Pipeline,  from
Southern's  pipeline  system to a  delivery  point in North  Carolina.  CP&L has
advised Southern that its need for additional pipeline  transportation have been
delayed  and that it will also  evaluate  other  competing  pipeline  proposals.
Consequently, work on this project has been indefinitely suspended. In the third
quarter  of  1999,  Southern  charged  to  general  and  administrative  expense
approximately $3 million related to this project.  Southern is unable to predict
whether or at what time this project may go forward.

Operations
<TABLE>
<CAPTION>
                                                                    Three Months                       Nine Months
                                                                Ended September 30,                Ended September 30,
                                                               ---------------------              --------------------
                                                           1999             1998              1999              1998
                                                           ----             ----              ----              ----
                                                                                 (In Millions)
Revenues:
    Market transportation and
<S>                                                        <C>               <C>             <C>               <C>
       storage                                             $80.2             $77.7           $246.0            $239.1
    Supply transportation                                   10.7              11.1             32.2              34.8
    Other                                                    4.5               4.6             13.1              20.5
                                                           -----             -----           ------            ------
       Total Revenues                                       95.4              93.4            291.3             294.4
                                                           -----             -----           ------            ------

Costs and Expenses:
    Operating and maintenance                               33.6              21.0             71.6              59.6
    General and administrative                              20.6              14.8             52.2              42.5
    Depreciation and amortization                           15.4              13.6             44.3              32.2
    Taxes, other than income                                 5.6               5.4             17.3              16.1
                                                           -----             -----           ------            ------
                                                            75.2              54.8            185.4             150.4
                                                           -----             -----           ------            ------

Operating Income                                            20.2              38.6            105.9             144.0
Other Income:
    Equity in earnings of
       unconsolidated affiliates                             2.6               6.0              7.5              15.7
    Other                                                    2.4               1.9              5.3               3.7
                                                           -----             -----           ------            ------
                                                             5.0               7.9             12.8              19.4
                                                           -----             -----           ------            ------

Earnings Before Interest and Taxes                         $25.2             $46.5           $118.7            $163.4
                                                           =====             =====           ======            ======

                                                                             (Billion Cubic Feet)
Volumes:
    Market transportation                                    141               140              452               462
    Supply transportation                                     90                85              269               283
                                                           -----             -----           ------            ------
       Total Volumes                                         231               225              721               745
                                                           =====             =====           ======            ======
</TABLE>




<PAGE>


Third Quarter 1999 to Third Quarter 1998 Analysis

         Earnings before interest and taxes (EBIT) for the third quarter of 1999
decreased $21.3 million  compared with the comparable  period of the prior year.
The decrease was  primarily  due to higher  operating  and  maintenance  expense
resulting  from a $10 million  reserve  established  due to expected  lower cost
recovery  related to a pipeline  expansion,  higher  general and  administrative
expense,   higher   depreciation   expense  and  lower  equity  in  earnings  of
unconsolidated affiliates. General and administrative expense was higher in 1999
primarily due to $3 million of expenses related to Southern's  Palmetto project,
$3 million of  benefits  related  charges and higher  stock-based  compensation.
Depreciation  expense  increased due to higher plant balances in 1999. Equity in
earnings of unconsolidated  affiliates decreased primarily due to lower earnings
at Destin Pipeline as a result of AFUDC capitalized in the 1998 period.

         Market  transportation  revenues  increased  due to  increased  volumes
associated with recent expansions.  Supply transportation  revenues declined due
to lower volumes at Sea Robin,  partially offset by the effect of higher volumes
at Southern.

Nine Months 1999 to Nine Months 1998 Analysis

         EBIT decreased  $44.7 million for the nine months ending  September 30,
1999  compared  with the 1998 period.  The decrease was  primarily due to higher
operating and maintenance expense,  higher depreciation expense,  higher general
and  administrative  expense,  and lower  equity in earnings  of  unconsolidated
affiliates.  Operating and maintenance  expense  increased  primarily due to the
establishment of the $10 million reserve  discussed above and the recognition of
a royalty  reserve  reversal of $4.2  million in the 1998  period.  Depreciation
expense  increased  primarily  due to a $7.0 million  pretax  adjustment  of the
salvage  value of certain  fixed  assets in the 1998  period  and  higher  plant
balances in 1999. General and administrative  expense increased primarily due to
expenses  related to the Palmetto  project,  benefits related charges and higher
stock-based   compensation   expense.   Equity  in  earnings  of  unconsolidated
affiliates  decreased  primarily due to lower  earnings at Destin  Pipeline as a
result of higher AFUDC capitalized in the 1998 period.

         Partially  offsetting  the  decrease  was the  effect of higher  market
transportation   revenues  due  to  increased  volumes  associated  with  recent
expansions.  Supply transportation revenues declined due to lower volumes at Sea
Robin.  Other income increased primarily due to the sale of certain facilities.

Natural Gas Sales and Supply

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


<PAGE>

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

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

Rate Matters

         Under terms of a  settlement  approved by the FERC,  all of  Southern's
previously  pending  rate  proceedings  and  proceedings  to recover  gas supply
realignment and other  transition costs  associated with the  implementation  of
FERC Order No. 636 were resolved. The settlement required Southern to file a new
rate case no later than September 1, 1999. In accordance  with this  settlement,
Southern  filed a rate case in August 1999. See Note 4 of the Notes to Condensed
Consolidated  Financial  Statements  for a  complete  description  of this  rate
proceeding.

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

         On September 29, 1999, the FERC rejected on procedural grounds proposed
tariff sheets filed by Destin, as a limited Section 4 proceeding, that contained
a rate  increase in its FT-1,  FT-2,  and IT rate  schedules  to reflect a $78.5
million  increase in the actual cost of construction  of its  facilities,  which
rate increase was to be mitigated by a proposed  lower  depreciation  rate.  The
Commission's  rejection  of the  proposed  changes does not preclude or restrict
Destin from filing to seek such changes  under a general  Section 4 rate change.
Destin may seek  rehearing of the order,  but cannot  predict the outcome of any
rehearing request.




<PAGE>

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

<S>                                                        <C>               <C>             <C>               <C>
Interest Expense, Net                                      $(8.1)            $(8.1)          $(24.8)           $(22.8)
</TABLE>

         Net interest  expense was flat in the  three-month  period of 1999. The
effect of higher  average  debt  levels  was  offset by higher  interest  income
resulting  from  higher  average  loan  balances  to  affiliates  and a  smaller
provision for interest related to income taxes.

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

<TABLE>
<CAPTION>
                                                               Three Months                         Nine Months
                                                            Ended September 30,                 Ended September 30,
                                                           1999             1998              1999              1998
                                                                                (In Millions)

<S>                                                        <C>               <C>             <C>               <C>
Income Tax Expense                                         $ 6.6             $14.6           $ 36.4            $ 53.9
</TABLE>

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

LIQUIDITY AND CAPITAL RESOURCES

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

<S>                                                                                         <C>                <C>
Operating Activities                                                                        $ 126.4            $108.5
</TABLE>

         Cash flow from  operations  increased  $17.9 million  compared to 1998.
This  increase  was due to the change in items  discussed  below.  The change in
depreciation is primarily due to the adjustments made in 1998 to reflect salvage
value on certain fixed assets.  Equity in earnings of unconsolidated  affiliates
was lower in 1999  compared  to 1998 due to lower  operating  results  at Destin
(discussed  earlier  in the  operating  section).  The  change in  reserves  for
regulatory  matters  is  attributable  to the  reversal  of a  reserve  in  1998
originally  established for royalties on take-or-pay  contract  buyouts.  In the
1999  period,  the caption  Other  includes  $16  million of reserve  provisions
related to  pipeline  expansions  and other  charges  (discussed  earlier in the
operating section).



<PAGE>


<TABLE>
<CAPTION>
                                                                                                    Nine Months
                                                                                                Ended September 30,
                                                                                              1999              1998
                                                                                                   (In Millions)

<S>                                                                                         <C>               <C>
Investing Activities                                                                        $(133.8)          $(205.1)
</TABLE>

         Net cash used in investing  activities  was $71.3 million lower in 1999
compared to 1998. The change was primarily  attributable to lower investments in
the Destin  pipeline  joint  venture  and  capital  expenditures  in the current
period.

<TABLE>
<CAPTION>
                                                                                                    Nine Months
                                                                                                Ended September 30,
                                                                                              1999              1998
                                                                                                   (In Millions)

<S>                                                                                         <C>               <C>
Financing Activities                                                                        $   7.3           $  93.8
</TABLE>

         Net cash provided by financing  activities  decreased  $86.5 million in
1999 compared to 1998  primarily due to the issuance of $100.0  million in notes
in the prior period and intercompany borrowings and the payment of a dividend to
Southern's parent in the current period.

Capital Resources

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

         Southern's  capital  expenditures and other investing  requirements for
1999 are expected to total  approximately  $168  million.  This amount  reflects
investments in unconsolidated affiliates, expansions and other projects.

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


<PAGE>

YEAR 2000 PROJECT

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

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

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

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

         The estimated  cost to the Company of the Year 2000 project for capital
as well as  general  and  administrative  costs is  expected  to be less than $5
million.  As of September 30, 1999, the Company has incurred  approximately $2.4
million  in Year 2000  project  costs.  The  Company  expects  to fund Year 2000
expenditures  from  normal  operations.   The  timing  of  expenditures  is  not
indicative of readiness efforts or progress to date.


<PAGE>

         The above  disclosure is a "Year 2000 Readiness  Disclosure"  made with
the  intention  to comply  fully with the Year 2000  Information  and  Readiness
Disclosure Act of 1998, Pub. L. No.  105-271,  112 Stat,  2386,  signed into law
October 19, 1998.  All  statements  made herein  shall be  construed  within the
confines  of that Act.  To the  extent  that any  reader of the above  year 2000
Readiness  Disclosure  is other than an  investor or  potential  investor in the
company's - or an affiliate's - equity or debt  securities,  this  disclosure is
made for the sole purpose of  communicating or disclosing  information  aimed at
correcting, helping to correct and/or avoiding Year 2000 failures.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

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

         Important factors that could cause actual results to differ include the
requirements to receive various governmental approvals, including the outcome of
current  proceedings before the FERC, to proceed with expansion projects and LNG
projects,  and the execution of final agreements and unanticipated  construction
delays in connection  with such projects.  Realization of Southern's  objectives
and  expected  performance  can also be  adversely  affected  by the  actions of
customers  and  competitors,  changes in  governmental  regulation of Southern's
businesses, and changes in general economic conditions and the state of domestic
capital markets.



<PAGE>


Item 3.           Quantitative and Qualitative Disclosure About Market Risk

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

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






<PAGE>


                           PART II. OTHER INFORMATION

Item 5.  Legal Proceedings

         Quinque Operating Company v. Gas Pipelines is a class action suit filed
in state court in Stevens County, Kansas in September 1999. Plaintiff filed suit
on behalf of itself and all gas producers,  royalty owners,  overriding  royalty
owners,  working  interest  owners,  and state  taxing  authorities  against 233
pipeline,  gathering,  marketing,  processing,  and  exploration  and production
companies,  including Southern Natural Gas, Sea Robin,  Sonat  Exploration,  and
Sonat  Marketing.  Plaintiff  alleges  that the  members  of the class have been
underpaid by the  defendants  due to the  mismeasurement  of gas volumes and the
heating  content of gas on non-federal and non-Native  American lands.  The case
has been removed to federal court. This suit makes similar  allegations to those
raised in Grynberg v. Southern Natural Gas, et al. regarding  federal and Native
American lands,  which is discussed in "Item 3. Legal  Proceedings" in Part I of
the  Company's  Report on Form 10-K for the Year Ended  December 31, 1998. As in
Grynberg,  management  believes  these  claims are without  merit and intends to
defend the suit  vigorously  and believes  that the ultimate  resolution of this
matter  will not have a  material  adverse  effect  on the  Company's  financial
position, results of operations, or cash flows.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits(1)

Exhibit
Number                                      Exhibits

12*           Computation of Ratio of Earnings to Fixed Charges

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

(b)      Reports on Form 8-K

         The Company  filed a report on Form 8-K on November 1, 1999,  reporting
certain  information  under  Item 1  relating  to the  change of  control of the
Company whereby Sonat, formerly the direct parent of the Company, merged into El
Paso Energy  pursuant to the Second  Amended and Restated  Agreement and Plan of
Merger dated March 13, 1999, between Sonat and El Paso Energy.

         The Company  filed a report on Form 8-K on November 4, 1999,  reporting
certain  information  under  Item  4  regarding  the  change  of  its  certified
accountant.



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



<PAGE>



                  SOUTHERN NATURAL GAS COMPANY AND SUBSIDIARIES




                                   SIGNATURES





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



                                            Southern Natural Gas Company



Date:       November 12, 1999         By:    /s/ H. Brent Austin
       ---------------------------          --------------------
                                            H. Brent Austin
                                            Executive Vice President and
                                                 Chief Financial Officer




Date:       November 12, 1999         By:    /s/ Jeffrey I. Beason
       ---------------------------          ----------------------
                                            Jeffrey I. Beason
                                            Senior Vice President and Controller
                                                 (Chief Accounting Officer)