SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to

For the Quarterly Period                                        Commission File
Ended September 30, 2000                                        Number 001-10311

                         KANEB PIPE LINE PARTNERS, L.P.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                              75-2287571
(State or other jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

                          2435 North Central Expressway
                             Richardson, Texas 75080
          (Address of principle executive offices, including zip code)

                                 (972) 699-4000
              (Registrant's telephone number, including area code)

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

Number of Units of the Registrant outstanding at November 1, 2000:    18,310,000

<PAGE>


KANEB PIPE LINE PARTNERS, L.P.  AND SUBSIDIARIES


FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2000
--------------------------------------------------------------------------------


                                                                        Page No.
                           Part I. Financial Information

Item 1.  Financial Statements (Unaudited)

         Consolidated Statements of Income -- Three and Nine Months
            Ended September 30, 2000 and 1999                              1

         Condensed Consolidated Balance Sheets -- September 30, 2000
            and December 31, 1999                                          2

         Condensed Consolidated Statements of Cash Flows -- Nine
            Months Ended September 30, 2000 and 1999                       3

         Notes to Consolidated Financial Statements                        4

Item 2.  Management's Discussion and Analysis of
            Financial Condition and Results of Operations                  9

                           Part II.  Other Information

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



<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(In Thousands -- Except Per Unit Amounts)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                             Three Months Ended             Nine Months Ended
                                                               September 30,                  September 30,
                                                       -----------------------------  -----------------------------
                                                             2000           1999            2000           1999
                                                       --------------  -------------  -------------  --------------

<S>                                                    <C>             <C>            <C>            <C>
Revenues                                               $       41,051  $      41,573  $     116,169  $      117,589
                                                       --------------  -------------  -------------  --------------
Costs and expenses:
     Operating costs                                           17,336         18,057         51,620          51,403
     Depreciation and amortization                              4,004          3,764         11,940          11,149
     General and administrative                                 2,245          2,301          7,262           6,975
                                                       --------------  -------------  -------------  --------------
       Total costs and expenses                                23,585         24,122         70,822          69,527
                                                       --------------  -------------  -------------  --------------
            Operating income                                   17,466         17,451         45,347          48,062
Interest and other income, net                                     84            103            225             385
Interest expense                                               (3,036)        (3,107)        (9,016)        (10,401)
                                                       --------------  ------------- -------------- ---------------
Income before minority interest
     and income taxes                                          14,514         14,447         36,556          38,046
Minority interest in net income                                  (142)          (140)          (359)           (370)
Income tax provision                                             (253)          (472)          (629)         (1,072)
                                                       --------------  -------------  ------------- ---------------
Net income                                                     14,119         13,835         35,568          36,604
General partner's interest in net income                         (435)          (481)        (1,238)         (1,218)
                                                       --------------  -------------  ------------- ---------------
Limited partners' interest in net income               $       13,684  $      13,354  $      34,330  $       35,386
                                                       ==============  =============  =============  ==============
Allocation of net income per Unit                      $         .75   $         .76  $        1.87  $        2.14
                                                       =============   =============  =============  =============
Weighted average number of Partnership
   Units outstanding                                           18,310         17,560         18,310          16,560
                                                       ==============  =============  =============  ==============
</TABLE>




                 See notes to consolidated financial statements
                                        1
<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
--------------------------------------------------------------------------------
                                                        September 30 December 31
                                                             2000        1999
                                                         -----------  ----------
                                                         (Unaudited)
         ASSETS
Current assets:
     Cash and cash equivalents                            $  6,123     $  5,127
     Accounts receivable                                    19,256       16,929
     Prepaid expenses and other                              4,260        5,036
                                                          --------     --------
         Total current assets                               29,639       27,092
                                                          --------     --------

Property and equipment                                     456,110      439,537
Less accumulated depreciation                              133,887      122,654
                                                          --------     --------
     Net property and equipment                            322,223      316,883
                                                          --------     --------
Investment in affiliate                                     22,168       21,978
                                                          --------     --------
                                                          $374,030     $365,953
                                                          ========     ========

     LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
     Current portion of long-term debt                    $ 48,000     $   --
     Accounts payable and accrued expenses                  18,793       14,980
     Accrued distributions payable                          13,372       13,372
     Payable to general partner                              1,742        1,411
                                                          --------     --------
         Total current liabilities                          81,907       29,763
                                                          --------     --------
Long-term debt, less current portion                       117,101      155,987

Other liabilities and deferred taxes                        10,795       10,882

Minority interest                                            1,006        1,033

Commitments and contingencies

Partners' capital                                          163,221      168,288
                                                          --------     --------
                                                          $374,030     $365,953
                                                          ========     ========

                 See notes to consolidated financial statements.
                                        2
<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                Nine Months Ended
                                                                  September 30,
                                                              --------------------
                                                                 2000       1999
                                                              ---------   --------

<S>                                                           <C>         <C>
Operating activities:
   Net income                                                 $ 35,568    $ 36,604
   Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization                              11,940      11,149
     Minority interest in net income                               359         370
     Equity in earnings of affiliate, net of distributions        (285)     (2,515)
     Deferred income taxes                                         629       1,110
     Changes in other liabilities                               (1,525)       --
     Changes in working capital components                       2,593          70
                                                              --------    --------
         Net cash provided by operating activities              49,279      46,788
                                                              --------    --------

Investing activities:
   Capital expenditures                                         (6,434)    (11,243)
   Acquisitions of terminals                                   (12,053)    (44,390)
   Other, net                                                     (481)     (1,642)
                                                              --------    --------
         Net cash used in investing activities                 (18,968)    (57,275)
                                                              --------    --------

Financing activities:
   Changes in payable to general partner                          --        (5,000)
   Issuance of debt                                             16,500      50,919
   Payments of debt                                             (5,700)    (57,447)
   Distributions to partners, including minority interest      (40,115)    (38,478)
   Net proceeds from issuance of KPP units                        --        65,574
                                                              --------    --------
         Net cash provided by (used in)
               financing activities                            (29,315)     15,568
                                                              --------    --------

Increase in cash and cash equivalents                              996        5081
Cash and cash equivalents at beginning of period                 5,127         849
                                                              --------    --------
Cash and cash equivalents at end of period                    $  6,123    $  5,930
                                                              ========    ========
Supplemental cash flow information - cash paid for interest   $  7,919    $  8,845
                                                              ========    ========
</TABLE>


                 See notes to consolidated financial statements.
                                        3

<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES


Notes to Consolidated Financial Statements
(Unaudited)
--------------------------------------------------------------------------------

1.   SIGNIFICANT ACCOUNTING POLICIES

     The unaudited  condensed  consolidated  financial  statements of Kaneb Pipe
     Line Partners,  L.P. and its subsidiaries (the "Partnership") for the three
     and nine  month  periods  ended  September  30,  2000 and  1999,  have been
     prepared  in  accordance  with  generally  accepted  accounting  principles
     applied on a consistent basis.  Significant accounting policies followed by
     the  Partnership are disclosed in the notes to the  consolidated  financial
     statements included in the Partnership's Annual Report on Form 10-K for the
     year  ended  December  31,  1999.  In  the  opinion  of  the  Partnership's
     management,  the accompanying  condensed  consolidated financial statements
     contain the adjustments, consisting of normal recurring accruals, necessary
     to present fairly the consolidated financial position of the Partnership at
     September  30, 2000 and the  consolidated  results of  operations  and cash
     flows for the periods ended September 30, 2000 and 1999.  Operating results
     for the three and nine months ended  September 30, 2000 are not necessarily
     indicative of the results that may be expected for the year ending December
     31, 2000.


2.   ACQUISITION OF TERMINALS

     On February 1, 1999, the  Partnership,  through two  wholly-owned  indirect
     subsidiaries,  acquired  six  terminals  in the  United  Kingdom  from GATX
     Terminal Limited for (pound)22.6 million (approximately $37.2 million) plus
     transaction   costs  and  the  assumption  of  certain   liabilities.   The
     acquisition,  which was initially  financed by term loans from a bank,  has
     been accounted for using the purchase  method of accounting.  $13.3 million
     of the term loans were repaid in July 1999 with the proceeds  from a public
     unit offering (see Note 3). The remaining portion ($24.1 million) is due in
     January 2002.


3.   PUBLIC OFFERING OF UNITS


     In July 1999, the Partnership issued 2.25 million limited partnership units
     in a public  offering at $30.75 per Unit,  generating  approximately  $65.6
     million in net  proceeds.  A portion of the  proceeds  was used to repay in
     full the  Partnership's  $15.0 million  promissory  note, the $25.0 million
     revolving  credit facility and $18.3 million in term loans (including $13.3
     million  in  term  loans   resulting  from  the  United  Kingdom   terminal
     acquisition referred to in Note 2.)


4.   COMPREHENSIVE INCOME

     Comprehensive income for the three and nine months ended September 30, 2000
     and 1999 is as follows:

<TABLE>
<CAPTION>
                                                         Three Months  Ended                 Nine Months Ended
                                                            September 30,                      September 30,
                                                     ---------------------------        ---------------------------
                                                         2000           1999                2000            1999
                                                     -----------     -----------        -----------      ----------
                                                                             (in thousands)
     <S>                                             <C>             <C>                <C>             <C>
     Net income                                      $    14,119     $    13,835        $    35,568     $    36,604
     Other comprehensive income (loss)
       - foreign currency translation
         adjustment                                           12             460               (913)           (197)
                                                     -----------     -----------        -----------     -----------
     Comprehensive income                            $    14,131     $    14,295        $    34,655     $    36,407
                                                     ===========     ===========        ===========     ===========
</TABLE>


5.   CASH DISTRIBUTIONS

     The  Partnership  makes  quarterly  distributions  of 100% of its Available
     Cash,  as  defined  in the  Partnership  Agreement,  to  holders of limited
     partnership units  ("Unitholders") and the general partner.  Available Cash
     consists  generally of all the cash receipts of the  Partnership,  plus the
     beginning cash balance less all of its cash disbursements and reserves. The
     Partnership  expects to make  distributions of all Available Cash within 45
     days  after  the  end of each  quarter  to  Unitholders  of  record  on the
     applicable  record date. A cash  distribution of $0.70 per unit for each of
     the first and second  quarter  of 2000 was paid on May 15,  2000 and August
     14, 2000, respectively. A cash distribution of $0.70 per unit for the third
     quarter of 2000 was  declared  to holders of record on October 31, 2000 and
     is payable on November 14, 2000.


6.   CONTINGENCIES

     Certain  operations of the  Partnership  are subject to Federal,  state and
     local laws and  regulations  relating  to  protection  of the  environment.
     Although  the  Partnership  believes  that its  operations  are in  general
     compliance with applicable  environmental  regulation,  risks of additional
     costs and liabilities  are inherent in its operations,  and there can be no
     assurance that  significant  costs and liabilities  will not be incurred by
     the  Partnership.  It is possible that other  developments  could result in
     substantial costs and liabilities to the Partnership. These include but are
     not limited to  increasingly  stringent  environmental  laws,  regulations,
     enforcement  policies  thereunder,  and claims for  damages to  property or
     persons resulting from the operations of the Partnership.

     Certain subsidiaries of the Partnership were sued in a Texas state court in
     1997 by Grace  Energy  Corporation  ("Grace"),  the  entity  from which the
     Partnership   acquired   ST  Services   in  1993.   The  lawsuit   involves
     environmental  response and remediation  allegedly  resulting from jet fuel
     leaks in the early 1970's from a pipeline. The pipeline,  which connected a
     former  Grace  terminal  with Otis Air  Force  Base in  Massachusetts,  was
     abandoned in 1976,  when the  connecting  terminal was sold to an unrelated
     entity.

     The lawsuit involves environmental response and remediation required by the
     State of Massachusetts.  Grace alleged that subsidiaries of the Partnership
     acquired the abandoned pipeline,  as part of the acquisition of ST Services
     in 1993, and assumed  responsibility  for  environmental  damages allegedly
     caused by the jet fuel leaks. Grace sought a ruling that these subsidiaries
     are responsible for all present and future  remediation  expenses for these
     leaks and that Grace has no obligation to indemnify these  subsidiaries for
     these expenses.

     In the lawsuit,  Grace also sought indemnification for expenses that it has
     incurred  since  1996  of  approximately  $3.5  million  for  response  and
     remediation  required  by the  State of  Massachusetts  and for  additional
     expenses that it expects to incur in the future. The consistent position of
     the  Partnership's  subsidiaries is that they did not acquire the abandoned
     pipeline as part of the 1993 ST  transaction,  and therefore did not assume
     any responsibility for the environmental  damage nor any liability to Grace
     for the pipeline.

     At the end of the  trial on May 19,  2000,  the  jury  returned  a  verdict
     including  findings  that  Grace  had  breached  a  provision  of the  1993
     acquisition agreement and that the pipeline was abandoned prior to 1978. On
     July 17, 2000, the Judge entered final  judgment in the case,  which is now
     on appeal to the Dallas Court of Appeals,  that Grace take nothing from the
     subsidiaries on its claims, including claims for future expenses.  Although
     the Partnership's subsidiaries have not incurred any expenses in connection
     with  the  remediation,   the  court  also  ruled,  in  effect,   that  the
     subsidiaries would not be entitled to an indemnification  from Grace if any
     such expenses were incurred in the future.  However,  the Judge let stand a
     prior  summary  judgment  ruling  that  the  pipeline  was an  asset of the
     Partnership  acquired  as part of the 1993 ST  transaction.  The Judge also
     awarded attorney fees to Grace.

     While the  judgment  means  that the  subsidiaries  have no  obligation  to
     reimburse  Grace for the  approximately  $3.5 million it has  incurred,  as
     required by the State of Massachusetts, the Partnership's subsidiaries have
     filed  an  appeal  of the  judgment  finding  that the  Otis  Pipeline  was
     transferred to them and the award of attorney fees.

     The Otis Air Force Base is a part of the Massachusetts Military Reservation
     ("MMR"),  which  has  been  declared  a  Superfund  Site  pursuant  to  the
     Comprehensive  Environmental Response,  Compensation and Liability Act. The
     MMR Site contains nine groundwater  contamination  plumes, two of which are
     allegedly associated with the pipeline,  and various other waste management
     areas of  concern,  such as  landfills.  The United  States  Department  of
     Defense and the United States Coast Guard, pursuant to a Federal Facilities
     Agreement,  have been responding to the Government  remediation  demand for
     most of the  contamination  problems at the MMR Site. Grace and others have
     also  received and  responded to formal  inquiries  from the United  States
     Government in connection with the environmental damages allegedly resulting
     from the jet fuel leaks. The  Partnership's  subsidiaries  have voluntarily
     responded  to an  invitation  from the  Government  to provide  information
     indicating  that  they  do not  own  the  pipeline.  In  connection  with a
     court-ordered mediation between Grace and the subsidiaries,  the Government
     advised  the  parties  in April 1999 that it has  identified  the two spill
     areas that it believes to be related to the pipeline that is the subject of
     the Grace suit. The Government  advised the parties that it believes it has
     incurred costs of approximately  $34 million,  and expects in the future to
     incur costs of  approximately  $55 million,  for  remediation of one of the
     spill areas. This amount was not intended to be a final accounting of costs
     or to include all  categories  of costs.  The  Government  also advised the
     parties that it could not at that time allocate its costs  attributable  to
     the second spill area. The  Partnership  believes that the ultimate cost of
     the  remediation,  while  substantial,  will be considerably  less than the
     Government has indicated.

     The  Government  has made no claims  against the  Partnership  or any other
     person on account of this matter. The Partnership believes that if any such
     claims were made, its subsidiaries would have substantial  defenses to such
     claims. Under Massachusetts law, the party responsible for remediation of a
     facility  is the last  owner  before  the  abandonment,  which  was a Grace
     company.  The Partnership does not believe that either the Grace litigation
     or any claims that may be made by the Government will adversely  affect its
     ability to make cash distributions to its unitholders,  but there can be no
     assurances in that regard.

     The Partnership has other contingent liabilities resulting from litigation,
     claims  and  commitments  incident  to the  ordinary  course  of  business.
     Management  believes,  based on the advice of  counsel,  that the  ultimate
     resolution of such  contingencies will not have a materially adverse effect
     on the financial position or results of operations of the Partnership.


7.   BUSINESS SEGMENT DATA

     The Partnership  conducts  business through two principal  operations;  the
     "Pipeline  Operations,"  which consists  primarily of the transportation of
     refined  petroleum  products in the Midwestern  states as a common carrier,
     and the  "Terminaling  Operations,"  which  provide  storage for  petroleum
     products, specialty chemicals and other liquids.

     The Partnership  measures segment profit as operating income.  Total assets
     are those controlled by each reportable segment.

<TABLE>
<CAPTION>
                                                         Three Months  Ended                 Nine Months Ended
                                                            September 30,                      September 30,
                                                     ---------------------------        ---------------------------
                                                         2000           1999                2000            1999
                                                     -----------     -----------        -----------      ----------
                                                                             (in thousands)
     <S>                                             <C>             <C>                <C>             <C>
     Business segment revenues:
       Pipeline operations                           $    19,567     $    18,708        $    52,298     $    50,054
       Terminaling operations                             21,484          22,865             63,871          67,535
                                                     -----------     -----------        -----------     -----------
                                                     $    41,051     $    41,573        $   116,169     $   117,589
                                                     ===========     ===========        ===========     ===========
     Business segment profit:
       Pipeline operations                           $    10,233     $    10,053        $    26,700     $    26,121
       Terminaling operations                              7,233           7,398             18,647          21,941
                                                     -----------     -----------        -----------     -----------
         Operating income                                 17,466          17,451             45,347          48,062

     Interest and other income, net                         84             103                225             385
       Interest expense                                   (3,036)         (3,107)            (9,016)        (10,401)
                                                     -----------     -----------        -----------     -----------
       Income before minority interest
           and income taxes                          $    14,514     $    14,447        $    36,556     $    38,046
                                                     ===========     ===========        ===========     ===========


                                                                                        September 30,   December 31,
                                                                                             2000           1999
                                                                                        ------------    ------------
     Total assets:
        Pipeline operations                                                             $    105,420    $    104,774
        Terminaling operations                                                               268,610         261,179
                                                                                        ------------    ------------
                                                                                        $    374,030    $    365,953
                                                                                        ============    ============
</TABLE>
<PAGE>
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES


Management's Discussion and Analysis of Financial Condition
and Results of Operations
--------------------------------------------------------------------------------

     This  discussion  should  be  read in  conjunction  with  the  consolidated
     financial statements of Kaneb Pipe Line Partners,  L.P. (the "Partnership")
     and notes thereto included elsewhere in this report.

     Operating Results:

     Pipeline Operations
<TABLE>
<CAPTION>
                                                        Three Months  Ended                 Nine Months Ended
                                                            September 30,                      September 30,
                                                     ---------------------------        ---------------------------
                                                         2000           1999                2000            1999
                                                     -----------     -----------        -----------      ----------
                                                                             (in thousands)

     <S>                                             <C>             <C>                <C>             <C>
     Revenues                                        $    19,567     $    18,708        $    52,298     $    50,054
     Operating costs                                       6,997           6,565             18,839          17,768
     Depreciation and amortization                         1,293           1,273              3,877           3,811
     General and administrative                            1,044             817              2,882           2,354
                                                     -----------     -----------        -----------     -----------
         Operating income                            $    10,233     $    10,053        $    26,700     $    26,121
                                                     ===========     ===========        ===========     ===========
</TABLE>


     Pipeline revenues are based on volumes shipped and the distances over which
     such volumes are transported. For the three and nine months ended September
     30, 2000, revenues increased 5% and 4%, respectively,  compared to the same
     1999 periods,  due to an overall  increase in short-haul  volumes  shipped.
     Barrel miles totaled 4.7 billion and 5.1 billion for the three months ended
     September  30,  2000 and  1999,  respectively,  and 13.1  billion  and 13.7
     billion  for  the  nine  months   ended   September   30,  2000  and  1999,
     respectively.

     Operating  costs,  which  include  fuel  and  power  costs,  materials  and
     supplies,  maintenance  and  repair  costs,  salaries,  wages and  employee
     benefits,  and  property  and other  taxes,  increased by 7% and 6% for the
     three and nine month periods ended September 30, 2000,  respectively,  when
     compared  to the same  1999  periods,  due to the  increase  in  short-haul
     volumes  shipped.   General  and   administrative   costs,   which  include
     managerial,  accounting,  and administrative personnel costs, office rental
     and expense,  legal and professional  costs and other  non-operating  costs
     increased  by $0.2  million  and $0.5  million for the three and nine month
     periods ended September 30, 2000 over the comparable prior year periods.
<PAGE>
     Terminaling Operations
<TABLE>
<CAPTION>

                                                        Three Months  Ended                 Nine Months Ended
                                                            September 30,                      September 30,
                                                     ---------------------------        ---------------------------
                                                         2000           1999                2000            1999
                                                     -----------     -----------        -----------      ----------
                                                                             (in thousands)

     <S>                                             <C>             <C>                <C>             <C>
     Revenues                                        $    21,484     $    22,865        $    63,871     $    67,535
     Operating costs                                      10,339          11,492             32,781          33,635
     Depreciation and amortization                         2,711           2,491              8,063           7,338
     General and administrative                            1,201           1,484              4,380           4,621
                                                     -----------     -----------        -----------     -----------
         Operating income                            $     7,233     $     7,398        $    18,647     $    21,941
                                                     ===========     ===========        ===========     ===========
</TABLE>

     On February 1, 1999, the  Partnership  acquired six terminals in the United
     Kingdom from GATX Terminals  Limited for  approximately  $37.2 million plus
     transaction  costs and the assumption of certain  liabilities  (the "United
     Kingdom Terminal Acquisition"). The acquisition of the six locations, which
     have an aggregate  tankage capacity of 5.4 million  barrels,  was initially
     financed  by term loans from a bank.  $13.3  million of the term loans were
     repaid in July 1999 with the  proceeds  from a public  unit  offering  (See
     Liquidity  and  Capital  Resources).  Three  of  the  terminals,   handling
     petroleum products, chemicals and molten sulfur,  respectively,  operate in
     England.  The  remaining  three  facilities,  two in  Scotland  and  one in
     Northern Ireland, are primarily petroleum terminals.  All six terminals are
     served by deepwater marine docks.

     Terminaling   revenues   decreased  by  $1.4  million  and  $3.7   million,
     respectively,  for the three and nine month  periods  ended  September  30,
     2000,  compared to the same 1999 periods.  Revenue increases resulting from
     the United  Kingdom  and other 1999  terminal  acquisitions  were more than
     offset by decreases in tank utilization due to unfavorable  domestic market
     conditions.  Average  annual  tankage  utilized  for the nine months  ended
     September  30,  2000  decreased  to 20.8  million  barrels,  down from 22.5
     million barrels for the comparable prior year period,  primarily the result
     of  unusually  high  utilization  at the  Partnership's  largest  petroleum
     storage  facility in 1999.  For the nine months ended  September  30, 2000,
     average  annualized  revenues per barrel of tankage  utilized  increased to
     $4.09 per  barrel,  compared  to $4.00 per  barrel  for the same prior year
     period,  the  result of the  storage  of a higher  proportionate  volume of
     specialty chemicals, which are historically at higher per barrel rates than
     petroleum products.

     For the three and nine month  periods ended  September 30, 2000,  operating
     costs  decreased  by $1.2  million  and $0.9  million,  respectively,  when
     compared to the same 1999 periods, due to decreases in costs resulting from
     the overall decline in volumes  stored.  General and  administrative  costs
     decreased by $0.3 million and $0.2 million, respectively, for the three and
     nine month periods ended  September 30, 2000, when compared to 1999, due to
     the  decreased  level of business.  Total  tankage  capacity  (30.5 million
     barrels  at  September  30,  2000) has been,  and is  expected  to  remain,
     adequate to meet existing customer storage requirements. Customers consider
     factors  such as  location,  access to cost  effective  transportation  and
     quality of  service,  in  addition  to  pricing,  when  selecting  terminal
     storage.


     Liquidity and Capital Resources

     During the first nine months of 2000,  the  Partnership's  working  capital
     requirements for operations,  capital  expenditures and cash  distributions
     were funded through the use of internally generated funds.

     Cash  provided by  operations  was $49.3  million and $46.8 million for the
     nine  months  ended  September  30,  2000 and 1999,  respectively.  Capital
     expenditures (excluding acquisitions) were $6.4 million for the nine months
     ended  September 30, 2000,  compared to $11.2 million  during the same 1999
     period.  The  Partnership  anticipates  that  routine  maintenance  capital
     expenditures will total  approximately $8 million to $12 million (excluding
     acquisitions) for the year ending December 31, 2000. At September 30, 2000,
     the  Partnership  had a  working  capital  deficit  of $52.3  million,  due
     primarily to $35.0 million of mortgage notes which are due in June 2001 and
     $13.0  million  of bank debt due in  January  2001.  Management  expects to
     refinance the mortgage notes and bank debt prior to maturity with long-term
     bank financing or through a public debt or unit offering.

     On September 22, 2000, the Partnership entered into a definitive  agreement
     to acquire Shore  Terminals LLC, the owner of seven  terminals with a total
     tankage capacity of approximately 7.8 million barrels,  for $106 million in
     cash and 2 million  partnership  units.  The cash  portion of the  purchase
     price will be funded with long-term bank  financing.  Four of the terminals
     are  located in  California,  with the  remaining  three  being  located in
     Washington,  Oregon and Nevada.  The closing of the  acquisition,  which is
     subject to  certain  regulatory  approvals,  is  expected  to occur in late
     December or early January 2001.

     In July 1999, the Partnership issued 2.25 million limited partnership units
     in a public  offering at $30.75 per Unit,  generating  approximately  $65.6
     million in net  proceeds.  A portion of the  proceeds  was used to repay in
     full the  Partnership's  $15.0 million  promissory  note, the $25.0 million
     revolving  credit facility and $18.3 million in term loans (including $13.3
     million  in  term  loans   resulting  from  the  United  Kingdom   Terminal
     Acquisition.)

     The  Partnership  makes  distributions  of  100% of its  Available  Cash to
     Unitholders and the general partner.  Available Cash consists  generally of
     all  the  cash   receipts  less  all  cash   disbursements   and  reserves.
     Distributions  of $0.70 per unit were  declared to all  Unitholders  in the
     first, second and third quarters of 2000 and $2.80 per unit was declared in
     the calendar year 1999.

     The Partnership  expects to fund future cash  distributions and maintenance
     capital  expenditures  with cash and cash flows from operating  activities.
     Expansionary  capital  expenditures  are  expected  to  be  funded  through
     additional Partnership borrowings and/or future public unit offerings.

     Additional information relative to sources and uses of cash is presented in
     the financial statements included in this report.


     Allocation of Net Income and Earnings

     Net income or loss is allocated  between limited partner  interests and the
     general   partner  pro  rata  based  on  the   aggregate   amount  of  cash
     distributions declared (including general partner incentive distributions).
     Beginning in 1997,  distributions  by the  Partnership  of  Available  Cash
     reached  the Second  Target  Distribution,  as  defined in the  Partnership
     Agreement,  which entitled the general partner to receive certain incentive
     distributions at different levels of cash distributions.  Earnings per Unit
     shown on the  consolidated  statements of income are calculated by dividing
     the limited partners' interest in net income by the weighted average number
     of Units  outstanding.  If the allocation of income had been made as if all
     income  had been  distributed  in cash,  earnings  per Unit would have been
     $0.73  and  $0.75  for the  three  months  and $1.90 and $2.13 for the nine
     months ended September 30, 2000 and 1999, respectively.


     Recent Accounting Pronouncement

     The Partnership  has assessed the reporting and disclosure  requirements of
     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
     Activities",  which establishes the accounting and reporting  standards for
     such  activities.   Under  SFAS  No.  133,  companies  must  recognize  all
     derivative  instruments on its balance sheet at fair value.  Changes in the
     value of derivative instruments which are considered hedges, will either be
     offset  against  the  change  in fair  value  of the  hedged  item  through
     earnings, or recognized in other comprehensive income until the hedged item
     is  recognized  in  earnings,  depending  on the nature of the  hedge.  The
     Partnership  will adopt SFAS No. 133, as amended,  in the first  quarter of
     2001. Currently the Partnership is not a party to any derivative contracts,
     and does not  anticipate  that adoption will have a material  effect on the
     Partnership's results of operations or financial position.

<PAGE>



                           Part II - Other Information

     Item 6.      Exhibits and Reports on Form 8-K

         (a)      Exhibits.
                  27.        Financial Data Schedule

         (b)      Reports on  Form 8-K

                  None.


                                    Signature


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.



                                                  KANEB PIPE LINE PARTNERS, L.P.
                                                         (Registrant)
                                                  By  KANEB PIPE LINE COMPANY
                                                     (Managing General Partner)


Date:   November 14, 2000                                     //s//
                                                 -------------------------------
                                                 Jimmy L. Harrison
                                                 Vice President and Controller