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                       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, 1996

                                       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 1-7320



                              ANR PIPELINE COMPANY
             (Exact name of registrant as specified in its charter)



           Delaware                                             38-1281775
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)


         500 Renaissance Center
            Detroit, Michigan                                   48243-1902
(Address of principal executive offices)                        (Zip Code)



       Registrant's telephone number, including area code: (313) 496-0200



                           ---------------------------





     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,  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X No _____

     As of October 31, 1996, there were outstanding 1,000 shares of common stock
of the  Registrant,  $100 par value per share,  its only class of common  stock.
None of the voting stock of the Registrant is held by nonaffiliates.

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<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

Item 1.     Financial Statements.

      The financial statements of ANR Pipeline Company and its subsidiaries (the
"Company" or "ANR Pipeline") are presented herein and are unaudited,  except for
balances  as of  December  31,  1995,  and  therefore  are  subject to  year-end
adjustments;  however,  all adjustments which are, in the opinion of management,
necessary  for a fair  statement  of the results of  operations  for the periods
covered  have been made.  The  adjustments  which have been made are of a normal
recurring nature.  Such results are not necessarily  indicative of results to be
expected for the year due to seasonal variations and market conditions affecting
natural gas deliveries.



                      ANR PIPELINE COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                              (Millions of Dollars)

<TABLE>
<CAPTION>

                                                                                 September 30,      December 31,
                                     ASSETS                                         1996                1995
                                                                                 -------------      ------------
                                                                                  (Unaudited)

<S>                                                                               <C>                <C>        
Property, Plant and Equipment, at cost.....................................       $   3,515.9        $   3,468.5
   Less - Accumulated depreciation.........................................           2,305.6            2,273.0
                                                                                  -----------        -----------
                                                                                      1,210.3            1,195.5
                                                                                  -----------        -----------

Current Assets:
   Cash and cash equivalents...............................................              28.6               22.9
   Note receivable from related party......................................             344.7              384.8
   Accounts receivable:
      Others...............................................................              54.9               73.5
      Related parties......................................................              10.7               14.0
   Materials and supplies, at average cost.................................              33.8               34.4
   Other...................................................................                .7                 .6
                                                                                  -----------        -----------
                                                                                        473.4              530.2
                                                                                  -----------        -----------

Other Assets:
   Assets related to excess gas supply.....................................              55.3               78.3
   Investment in pipeline partnerships.....................................              48.6               35.2
   Order 636 transition costs..............................................              91.0              127.6
   Deferred charges and other..............................................              67.5               73.8
                                                                                  -----------        -----------
                                                                                        262.4              314.9
                                                                                  -----------        -----------

                                                                                  $   1,946.1        $   2,040.6
                                                                                  ===========        ===========
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                      - 1 -
<PAGE>

                      ANR PIPELINE COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                              (Millions of Dollars)

<TABLE>
<CAPTION>
                                                                                 September 30,      December 31,
                      STOCKHOLDER'S EQUITY AND LIABILITIES                          1996                1995
                                                                                 -------------      ------------
                                                                                  (Unaudited)

<S>                                                                               <C>                <C>
Common Stock and Other Stockholder's Equity:
   Common stock, $100 par value, authorized, issued and outstanding
      1,000 shares.........................................................       $        .1        $        .1
   Additional paid-in capital..............................................             466.2              466.2
   Retained earnings.......................................................             389.1              443.4
                                                                                  -----------        -----------
                                                                                        855.4              909.7
                                                                                  -----------        -----------

Long-Term Debt.............................................................             497.7              497.7
                                                                                  -----------        -----------

Capital Lease Obligations with Related Party...............................               9.4               11.6
                                                                                  -----------        -----------

Current Liabilities:
   Capital lease obligations with related party............................               3.0                3.0
   Accounts payable:
      Others...............................................................              98.8              131.0
      Related parties......................................................               3.9                6.0
   Taxes on income.........................................................             (29.3)             (14.0)
   Other taxes.............................................................              19.0               21.5
   Provision for regulatory matters........................................             114.3               79.2
   Other...................................................................              35.8               30.4
                                                                                  -----------        -----------
                                                                                        245.5              257.1
                                                                                  -----------        -----------

Deferred Credits and Other:
   Accumulated deferred income taxes.......................................             219.4              223.0
   Other...................................................................             118.7              141.5
                                                                                  -----------        -----------
                                                                                        338.1              364.5
                                                                                  -----------        -----------

                                                                                  $   1,946.1        $   2,040.6
                                                                                  ===========        ===========
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                      - 2 -
<PAGE>

                      ANR PIPELINE COMPANY AND SUBSIDIARIES
                       STATEMENT OF CONSOLIDATED EARNINGS
                              (Millions of Dollars)

<TABLE>
<CAPTION>

                                                                     Three Months Ended        Nine Months Ended
                                                                        September 30,            September 30,
                                                                   ----------------------   ---------------------
                                                                      1996        1995        1996         1995
                                                                   ----------  ----------   ---------   ---------
                                                                         (Unaudited)              (Unaudited)

<S>                                                                <C>         <C>          <C>         <C>
Revenues:
   Storage and transportation:
      Others....................................................   $    133.8  $    180.1   $   454.6   $   533.4
      Related parties...........................................          3.1         1.9        16.1         5.9
   Gas sales:
      Others....................................................          2.4         3.0         8.3        18.5
      Related parties...........................................          6.1         9.3        19.3        30.2
   Other revenues:
      Others....................................................          4.0        13.1        18.5        18.6
      Related parties...........................................         10.9         6.2        31.8        22.6
                                                                   ----------  ----------   ---------   ---------
                                                                        160.3       213.6       548.6       629.2
                                                                   ----------  ----------   ---------   ---------

Costs and Expenses:
   Operation and maintenance:
      Others....................................................         58.1        79.9       186.9       209.8
      Related parties...........................................         25.5        23.9        73.0        76.6
   Cost of gas..................................................         14.3        25.2        51.1        79.0
   Depreciation and amortization................................         13.6        13.1        40.7        37.6
   Interest expense.............................................         14.8        15.9        44.3        44.6
   Taxes on income..............................................         12.5        21.2        56.9        66.2
                                                                   ----------  ----------   ---------   ---------
                                                                        138.8       179.2       452.9       513.8
                                                                   ----------  ----------   ---------   ---------

Net Earnings....................................................   $     21.5  $     34.4   $    95.7   $   115.4
                                                                   ==========  ==========   =========   =========
</TABLE>




                 See Notes to Consolidated Financial Statements.

                                      - 3 -
<PAGE>

                      ANR PIPELINE COMPANY AND SUBSIDIARIES
                      STATEMENT OF CONSOLIDATED CASH FLOWS
                              (Millions of Dollars)

<TABLE>
<CAPTION>
                                                                                        Nine Months Ended
                                                                                          September 30,
                                                                                   -------------------------
                                                                                      1996            1995
                                                                                   ---------        --------
                                                                                           (Unaudited)

<S>                                                                                <C>              <C>
Cash Flows from Operating Activities:
   Net earnings................................................................    $    95.7        $  115.4
   Adjustments to reconcile net earnings to net cash provided by
      operating activities:
         Depreciation and amortization.........................................         43.1            39.4
         Net decrease (increase) in working capital:
           Others..............................................................          8.7           (27.7)
           Related parties.....................................................          1.2            (2.6)
         Net decrease in other assets/liabilities..............................         27.5            33.3
                                                                                   ---------        --------
           Total adjustments...................................................         80.5            42.4
                                                                                   ---------        --------

         Net cash provided by operating activities.............................        176.2           157.8
                                                                                   ---------        --------

Cash Flows from Investing Activities:
   Decrease (increase) in note receivable from related party...................         40.1          (175.7)
   Capital expenditures........................................................        (60.5)          (24.7)
   Other.......................................................................          2.1              .9
                                                                                   ---------        --------

         Net cash used in investing activities.................................        (18.3)         (199.5)
                                                                                   ---------        --------

Cash Flows from Financing Activities:
   Proceeds from issuance of long-term debt....................................            -            75.0
   Retirement of related party capital lease obligations.......................         (2.2)           (2.0)
   Common stock dividends paid.................................................       (150.0)          (30.1)
                                                                                   ---------        --------

         Net cash (used in) provided by financing activities...................       (152.2)           42.9
                                                                                   ---------        --------

Net Increase in Cash and Cash Equivalents......................................          5.7             1.2

Cash and Cash Equivalents at Beginning of Period...............................         22.9            22.0
                                                                                   ---------        --------

Cash and Cash Equivalents at End of Period.....................................    $    28.6        $   23.2
                                                                                   =========        ========
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                      - 4 -
<PAGE>

                      ANR PIPELINE COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies

     For additional  information  relative to operations and financial position,
reference  is made to the  Company's  Annual  Report on Form 10-K for the fiscal
year  ended  December  31,  1995.  Certain  reclassifications  of  prior  period
statements  have been made to conform  with  current  reporting  practices.  The
effect of the reclassifications  was not material to the Company's  consolidated
financial position or results of operations.

     The Company adopted  Statement of Financial  Accounting  Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed  Of" in 1996.  The  application  of the new  standard did not have a
material effect on the Company's  consolidated  financial position or results of
operations.

     The Company is subject to the regulations and accounting  procedures of the
Federal Energy Regulatory  Commission  ("FERC").  The Company meets the criteria
and, accordingly, follows the reporting and accounting requirements of Statement
of Financial Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation" ("FAS No. 71"). This statement provides that rate-regulated
public utilities  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 the costs of providing the regulated service
and if the competitive environment makes it reasonable to assume that such rates
can be charged and  collected.  Although the  accounting  methods for  companies
subject to rate regulation may differ from those used by nonregulated companies,
the accounting  methods  prescribed by the regulatory  authority  conform to the
generally  accepted  accounting  principle of matching costs with the revenue to
which they apply.

     Transactions which the Company has recorded differently than a nonregulated
entity include the following: the Company (i) has capitalized the cost of equity
funds used during  construction,  and,  (ii) has  deferred  purchase  gas costs,
contract reformation costs,  certain lease costs,  postemployment/postretirement
benefit costs and income tax reductions related to changes in federal income tax
rates. These items are being, or are anticipated to be, recovered or refunded in
rates chargeable to customers.

     The  Company  has applied FAS No. 71 and  evaluates  the  applicability  of
regulatory  accounting  and the  recoverability  of those assets through rate or
other  contractual  mechanisms  on an ongoing  basis.  If FAS No. 71  accounting
principles should no longer be applicable to the Company's operations, an amount
would be charged to earnings as an  extraordinary  item.  At September 30, 1996,
this amount was  approximately  $148 million,  net of income taxes.  The Company
does  not  expect  that its  cash  flows  would  be  affected  by  discontinuing
application of FAS No. 71. Any potential charge to earnings would be noncash and
would have no direct  effect on either  the  Company's  ability  to include  the
underlying  deferred  items in future  rate  proceedings  or on its  ability  to
collect the rates set thereby.

     Supplemental  information  relative to the Statement of  Consolidated  Cash
Flows includes the following:  The Company made cash payments for interest,  net
of interest  capitalized,  of $32.7  million and $32 million for the  nine-month
periods  ended  September  30, 1996 and 1995,  respectively.  Cash  payments for
income  taxes  amounted to $83.1  million and $56.7  million for the  nine-month
periods ended September 30, 1996 and 1995, respectively.


                                      - 5 -
<PAGE>

2.   Income Taxes

     Provisions for income taxes were as follows (millions of dollars):

<TABLE>
<CAPTION>
                                                                     Three Months Ended        Nine Months Ended
                                                                        September 30,            September 30,
                                                                   ----------------------   ---------------------
                                                                      1996        1995        1996         1995
                                                                   ---------    --------    --------     --------
                                                                         (Unaudited)              (Unaudited)

      <S>                                                          <C>          <C>         <C>         <C>
      Federal Income Taxes:
         Currently payable....................................     $   16.0     $  29.3     $  73.5     $  81.2
         Deferred.............................................         (4.6)      (10.2)      (21.8)      (18.1)
                                                                   --------     -------     -------     -------
                                                                       11.4        19.1        51.7        63.1
      State and City Income Taxes.............................          1.1         2.1         5.2         3.1
                                                                   --------     -------     -------     -------
                                                                   $   12.5     $  21.2     $  56.9     $  66.2
                                                                   ========     =======     =======     =======
</TABLE>

3.   Common Stock

     All of the issued and  outstanding  common stock of the Company is owned by
American Natural Resources Company ("ANR"), a wholly-owned subsidiary of Coastal
Natural Gas Company. Coastal Natural Gas Company is a wholly-owned subsidiary of
The Coastal Corporation. Therefore, earnings and cash dividends per common share
have no significance and are not presented.

4.   Litigation, Environmental and Regulatory Matters

     Litigation Matters

     A natural gas producer  has filed a claim on behalf of the U.S.  government
in the U.S.  District Court for the District of Columbia under the federal False
Claims Act. The Second Amended Complaint filed on May 24, 1996,  against seventy
(70) defendants, including ANR Pipeline, alleges that the defendants' methods of
measuring  the  heating  content  and  volume  of  natural  gas  purchased  from
federally-owned  or Indian  properties have caused  underpayment of royalties to
the U.S. government. Responsive pleadings will be filed.

     Numerous  other  lawsuits  and other  proceedings  which have arisen in the
ordinary course of business are pending or threatened against the Company or its
subsidiaries.  Although no assurances can be given and no  determination  can be
made at this time as to the outcome of any particular lawsuit or proceeding, the
Company believes there are meritorious defenses to substantially all such claims
and that any  liability  which  may  finally  be  determined  should  not have a
material  adverse  effect on the Company's  consolidated  financial  position or
results of operations.

     Environmental Matters

     The Company's  operations  are subject to extensive  and evolving  federal,
state  and local  environmental  laws and  regulations  which  may  affect  such
operations and costs as a result of their effect on the construction,  operation
and  maintenance  of its pipeline  facilities.  The Company  anticipates  annual
capital  expenditures of $2.8 million per year over the next several years aimed
at  maintaining  compliance  with  such  laws  and  regulations.   Additionally,
appropriate governmental authorities may enforce the laws and regulations with a
variety of civil and criminal enforcement measures, including monetary penalties
and remediation requirements.

     The Comprehensive  Environmental Response,  Compensation and Liability Act,
also known as Superfund, as reauthorized,  imposes liability,  without regard to
fault  or the  legality  of the  original  act,  for  disposal  of a  "hazardous
substance."  The Company has been named as a  potentially  responsible  party in
five  Superfund  waste  disposal  sites.  At these  sites,  there is  sufficient
information to estimate total cleanup costs of approximately $39 million and the
Company  estimates  its pro-rata  exposure,  to be paid over a period of several
years, is approximately $.9 million.


                                      - 6 -
<PAGE>

     There are additional areas of environmental remediation responsibilities to
which the Company  may be subject.  The states  have  regulatory  programs  that
mandate  waste  cleanup.  The  Clean  Air Act  Amendments  of 1990  include  new
permitting regulations which will result in increased operating expenditures.

     Future information and developments will require the Company to continually
reassess  the  expected  impact of these  environmental  matters.  However,  the
Company  has  evaluated  its total  environmental  exposure  based on  currently
available  data,  including  its  potential  joint and  several  liability,  and
believes that compliance with all applicable laws and regulations  will not have
a material  adverse impact on the Company's  liquidity,  consolidated  financial
position or results of operations.

     Regulatory Matters

     On January 31, 1996, the FERC issued a "Statement of Policy and Request for
Comments" in Docket Nos. RM95-6 and RM96-7 with respect to a pipeline's  ability
to negotiate and charge rates for individual customers' services which would not
be limited to the "cost-based" rates established by the FERC in traditional rate
making.  Under  this  Policy,  a  pipeline  and a  customer  will be  allowed to
negotiate  a contract  for service  which  provides  for rates and charges  that
exceed the pipeline's  posted  maximum  tariff rates,  provided that the shipper
agreeing to such negotiated rates has the ability to elect to receive service at
the  pipeline's  posted maximum rate (known as a "recourse  rate").  In order to
implement  this Policy,  a pipeline must make an initial  tariff filing with the
FERC to indicate that it intends to contract for services under this Policy, and
subsequent  tariff  filings will indicate  each instance  where the pipeline has
negotiated a rate for service which exceeds the posted  maximum tariff rate. The
FERC is also considering comments on whether this "recourse rate" program should
be extended to other terms and conditions of pipeline  transportation  services.
On July 31,  1996,  the FERC also  issued a "Notice of Proposed  Rulemaking"  in
Docket No. RM96-14  requesting  comments on various aspects of secondary  market
transactions on interstate natural gas pipelines, including the comparability of
pipeline capacity with released capacity.

     Under the Company's Interim Settlement,  which became effective November 1,
1992 and  expired on  November  1,  1993,  gas  inventory  demand  charges  were
collected from the Company's  former resale  customers.  This method of gas cost
recovery  required  refunds for any  over-collections  and placed the Company at
risk for under-collections.  As required by the Interim Settlement, on April 29,
1994,  the  Company  filed  with  the  FERC  a  reconciliation   report  showing
over-collections and proposing refunds totaling $45.1 million. Certain customers
have disputed the level of those  refunds.  Pursuant to a February 27, 1995 FERC
order approving the Company's refund  allocation  methodology,  the Company paid
undisputed refunds on March 29, 1995 of $45.1 million,  together with applicable
interest,  subject to further investigation of the claims made by the customers.
The FERC's approval of the Company's refund allocation  methodology was appealed
by certain  customers to the United States Court of Appeals for the D.C. Circuit
and that appeal was dismissed in an April 24, 1996 Court order.  On May 2, 1995,
the FERC issued an order setting other issues for an  evidentiary  hearing which
concluded on May 29,  1996.  The Company  submitted  an adjusted  reconciliation
report on October 31, 1995,  which was also  disputed by certain  customers  and
which was also consolidated with the ongoing evidentiary hearing. Initial briefs
were filed on July 31, 1996, and reply briefs were filed on October 21, 1996.

     On April 8, 1992,  the FERC issued Order 636,  which  required  significant
changes in the  services  provided  by  interstate  natural gas  pipelines.  The
Company and numerous  other  parties have sought  judicial  review of aspects of
Order 636 before the United  States  Court of Appeals for the D.C.  Circuit.  On
July 16, 1996,  the Court issued its opinion  upholding  the basic  structure of
Order 636, while remanding to the FERC for further consideration certain limited
aspects, such as the basis for its determination relative to the recovery by the
pipelines  of the full  level  of their  prudently  incurred  transition  costs.
Several  persons,  including  ANR Pipeline,  have also  appealed  aspects of the
FERC's orders  approving the  Company's  restructuring  filings made pursuant to
Order 636 and these appeals are now expected to be scheduled  for briefing.  ANR
Pipeline  placed  its  restructured  services  under  Order  636 into  effect on
November  1, 1993.  On March 24,  1994,  the FERC  issued its  "Fourth  Order on
Compliance  Filing  and Third  Order on  Rehearing,"  which  addressed  numerous
rehearing  issues and  confirmed  that,  after minor tariff  modifications,  the
Company would be fully in compliance with Order 636 and the  requirements of the
orders on its restructuring filings.

     Under FERC Docket No. RP94-43, the Company filed a general rate increase on
November 1, 1993. By a March 23, 1994 order, the FERC granted and denied various
requests for summary disposition and established hearing


                                      - 7 -
<PAGE>

procedures  for issues  remaining  to be  investigated  in the  proceeding.  The
hearing  commenced on January 31, 1996 and concluded on April 24, 1996.  Initial
briefs were filed on July 15, 1996, and reply briefs were filed on September 13,
1996.  The case is now  pending  before a  substitute  Administrative  Law Judge
("ALJ").  Under the  March  23,  1994  order,  certain  costs  were  reduced  or
eliminated, resulting in revised rates that reflect an $85.7 million increase in
the cost of service  underlying that approved in the Interim  Settlement,  and a
$182.8  million  increase  over the cost of  service  underlying  the  Company's
approved rates for its Order 636 restructured  services.  On April 29, 1994, the
Company  filed a motion  with the FERC that placed the new rates into effect May
1, 1994,  subject to refund.  The Company's filing was accepted by the FERC in a
September  21,  1994  order,  subject to  further  modifications,  including  an
additional reduction in cost of service of approximately $5 million. The Company
submitted  revised rates in compliance with this order on October 6, 1994, which
rates are currently in effect,  subject to refund.  The Company sought rehearing
of various aspects of the March 23, 1994 order and the FERC denied  rehearing in
a December 8, 1994 order. On January 26, 1995, the Company appealed these orders
to the United  States  Court of Appeals for the D.C.  Circuit,  and the Court is
expected to schedule the cases for briefing.

     The FERC has also issued a series of orders and orders on  rehearing in the
Company's  rate  proceeding  that  apply a new  policy  governing  the  order of
attribution  of revenues  received by the Company  related to  transition  costs
under  Order 636.  Under that new  policy,  the  Company  is  required  to first
attribute  the  revenues it  receives  for its  services to the  recovery of its
transition costs under Order 636. In its pending rate  proceeding,  the revenues
the Company  receives for its services were first  attributed to the recovery of
its base cost of service.  The FERC's change in its revenue  attribution  policy
has the effect of understating the Company's  currently  effective maximum rates
and has accelerated its amortization of transition costs. In light of the FERC's
policy,  the Company has filed with the FERC to increase its  discount  recovery
adjustment in its pending rate proceeding.  The Company has also sought judicial
review of these  orders  before the United  States Court of Appeals for the D.C.
Circuit, and the Court is expected to schedule the case for briefing.

     Claims  were filed in 1990 in the  United  States  District  Court in North
Dakota  by  Dakota  Gasification   Company  ("Dakota")  and  the  United  States
Department  of Energy  regarding  the  Company's  obligations  under certain gas
purchase and  transportation  contracts with the Great Plains Coal  Gasification
Plant  (the  "Plant").  On  February  16,  1994,  ANR  Pipeline,  Dakota and the
Department  of  Energy   executed  a  Settlement   Agreement  (the   "Settlement
Agreement"),  which,  subject to FERC  approval,  resolves  the  litigation  and
disputes  among the  parties,  amends the gas  purchase  agreement  between  the
Company and Dakota and terminates the transportation contract with the Plant. On
August 3, 1994,  the  Company  filed a petition  with the FERC  requesting:  (i)
approval of the  Settlement  Agreement;  (ii) an order  approving ANR Pipeline's
proposed  tariff  mechanism  to recover  the costs  incurred  to  implement  the
Settlement  Agreement;  and  (iii)  an  order  dismissing  a then  pending  FERC
proceeding  wherein  certain of ANR  Pipeline's  customers  challenged  Dakota's
pricing  under the original gas supply  contract.  By an October 18, 1994 order,
the FERC  consolidated  the Company's  petition with similar  petitions of three
other pipeline  companies.  Hearings were held before the ALJ on the prudence of
the  Settlement  Agreement,  and on December 29, 1995, the ALJ issued an Initial
Decision rejecting the proposed  Settlement  Agreement and determining the level
of Dakota  costs that ANR  Pipeline and the other  pipeline  companies  would be
permitted to recover from their customers  beginning as of May 1993. Because the
amounts ANR Pipeline has billed to its customers since May 1993 are greater than
the Dakota  costs ANR Pipeline  would be permitted to recover  under the Initial
Decision,  ANR Pipeline may be required to refund to its customers the amount of
excess  collections.  At September  30, 1996,  that  potential  refund amount is
approximately $84 million, plus interest. It is ANR Pipeline's position that (i)
the Settlement  Agreement is prudent,  (ii) the FERC has no lawful  authority to
order refunds for past periods and (iii) even if refunds were  ultimately  found
to be lawful,  ANR Pipeline should not lawfully be required to refund amounts in
excess of the amounts it collects  from Dakota.  ANR Pipeline has filed with the
FERC seeking  reversal of the Initial  Decision,  and approval of the Settlement
Agreement.  The FERC  conducted  an oral  argument on  September  25, 1996 and a
decision is expected before the end of 1996.

     Order 636 provides  mechanisms for recovery of transition  costs associated
with  compliance with that Order.  Limited  aspects of those  mechanisms are the
subject of the Court remand  discussed  above.  The Company's  transition  costs
consist  primarily  of gas supply  realignment  costs and  pricing  differential
costs. As of September 30, 1996, the Company  incurred  transition  costs in the
amount  of $62.3  million.  In  addition,  the  Company  recorded  a  contingent
liability  for $64.1  million  representing  future  above-market  gas  purchase
obligations,  including future  obligations of $52.3 million associated with the
Settlement Agreement, as discussed above. The charge related to the contingent

                                      - 8 -
<PAGE>


liability has been deferred in anticipation of future rate recovery. The Company
has filed for recovery of  approximately  $59.9  million of incurred  transition
costs.  The FERC has accepted  $42.7 million of these  filings for recovery,  of
which $28.6  million has been  settled with the parties to the  respective  FERC
proceedings.  Those  filings  not  settled  are  subject to refund  and  further
proceedings.  Additional transition costs filings will be made by the Company in
the future.

     Certain of the above regulatory  matters and other regulatory issues remain
unresolved  among the Company,  its  customers,  its suppliers and the FERC. The
Company has made  provisions  which  represent  management's  assessment  of the
ultimate  resolution of the above issues. As a result,  the Company  anticipates
that these  regulatory  matters will not have a material  adverse  effect on its
consolidated  financial  position  or results of  operations.  While the Company
estimates the provisions to be adequate to cover  potential  adverse  rulings on
these and other  issues,  it cannot  estimate  when each of these issues will be
resolved.

5.   Capital Lease Obligations with Related Party

     The Company is the lessee of eight natural gas storage fields under capital
leases.  On  September  30, 1996,  ANR acquired  100% of the common stock of the
lessor.  As a result,  capital lease  obligations  are now classified as related
party transactions.


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

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations includes certain  forwardlooking  statements reflecting the Company's
expectations  in the near future;  however,  many  factors  which may affect the
actual  results,  especially  natural gas prices and changing  regulations,  are
difficult  to predict.  Accordingly,  there is no assurance  that the  Company's
expectations will be realized.

     The Notes to Consolidated  Financial Statements contain information that is
pertinent to the following analysis.

                         Liquidity and Capital Resources

     General.  On June 28, 1996, the Company paid a $150 million dividend on its
common stock.  Management  believes that the Company's stable financial position
and earnings  ability will enable it to continue to generate and obtain  capital
for financing needs in the foreseeable future.

     Environmental.  The  Company's  operations  are  subject to  extensive  and
evolving federal,  state and local  environmental laws and regulations which may
affect  such   operations  and  costs  as  a  result  of  their  effect  on  the
construction,  operation and maintenance of its pipeline facilities. The Company
anticipates  annual capital  expenditures of $2.8 million per year over the next
several years aimed at maintaining  compliance  with such laws and  regulations.
Additionally,  appropriate  governmental  authorities  may  enforce the laws and
regulations with a variety of civil and criminal enforcement measures, including
monetary penalties and remediation requirements.

     The Comprehensive  Environmental Response,  Compensation and Liability Act,
also known as Superfund, as reauthorized,  imposes liability,  without regard to
fault  or the  legality  of the  original  act,  for  disposal  of a  "hazardous
substance."  The Company has been named as a  potentially  responsible  party in
five  Superfund  waste  disposal  sites.  At these  sites,  there is  sufficient
information to estimate total cleanup costs of approximately $39 million and the
Company  estimates  its pro-rata  exposure,  to be paid over a period of several
years, is approximately $.9 million.

     There are additional areas of environmental remediation responsibilities to
which the Company  may be subject.  The states  have  regulatory  programs  that
mandate  waste  cleanup.  The  Clean  Air Act  Amendments  of 1990  include  new
permitting regulations which will result in increased operating expenditures.

     Future information and developments will require the Company to continually
reassess  the  expected  impact of these  environmental  matters.  However,  the
Company  has  evaluated  its total  environmental  exposure  based on  currently
available  data,  including  its  potential  joint and  several  liability,  and
believes that compliance with all applicable laws

                                      - 9 -
<PAGE>

and  regulations  will not  have a  material  adverse  impact  on the  Company's
liquidity, consolidated financial position or results of operations.

                              Results of Operations

     ANR Pipeline placed its  restructured  services under Order 636 into effect
on November 1, 1993 (see Note 4 of Notes to Consolidated  Financial Statements).
As a result,  the Company no longer offers a merchant service and has bought out
or assigned a significant portion of its gas purchase contracts.  The Company is
continuing to negotiate the  termination of the remaining gas purchase  contract
obligations. The Company's Order 636 restructured tariff provides mechanisms for
the  purpose  of  recovering  from  its  transportation  customers  any  pricing
differential  between costs  incurred to purchase gas under these  contracts and
the amounts recovered through auctioning of such gas on the open market.

     The Company offers a wide range of "unbundled" storage, transportation, and
balancing  services,  primarily in the Midwest and increasingly in the Northeast
regions of the United  States.  The Midwest  region is  continuing to experience
intensified  competition  due to  excess  pipeline  capacity  and,  as a result,
capacity is currently  trading at lower rates because of remarketing of capacity
at discounted  rates by  customers.  The Company  believes this excess  pipeline
capacity  will  lessen by the end of the decade as demand for  natural gas grows
and competitors convert or retire underutilized  assets.  Although the Company's
transportation  capacity is currently  sold out in this region,  the Company has
instituted   reengineering   projects   and   cost-cutting   efforts  to  remain
competitive.

     Certain costs,  including Order 636 transition costs,  contract reformation
costs and purchased gas costs discussed  above,  have been deferred  pursuant to
provisions of FAS No. 71. The Company  evaluates the applicability of regulatory
accounting under FAS No. 71 and the  recoverability of these assets through rate
or other  contractual  mechanisms on an ongoing basis.  If FAS No. 71 accounting
principles should no longer be applicable to the Company's operations, an amount
would be charged to earnings as an  extraordinary  item.  At September 30, 1996,
this amount was  approximately  $148 million,  net of income taxes.  The Company
does  not  expect  that its  cash  flows  would  be  affected  by  discontinuing
application of FAS No. 71. Any potential charge to earnings would be noncash and
would have no direct  effect on either  the  Company's  ability  to include  the
underlying  deferred  items in future  rate  proceedings  or on its  ability  to
collect the rates set thereby.  Additional  information concerning FAS No. 71 is
set  forth in Note 1 of  Notes to  Consolidated  Financial  Statements  included
herein.

     The change in the Company's  earnings for the three- and nine-month periods
ended September 30, 1996 in comparison to the corresponding periods in 1995 is a
result of the following:

     Revenues.  Storage and transportation revenues decreased for the three- and
nine-month  periods ended  September 30, 1996 as compared to the same periods in
1995 by $45.1 million and $68.6  million,  respectively.  Contributing  to these
decreases were lower storage and transportation revenues of $5 million and $18.5
million for the three- and  nine-month  periods,  respectively,  resulting  from
continued,   intensified  competition  across  the  United  States  natural  gas
industry,  particularly  in the Midwest  region in which the  Company  operates.
Additional  items which  decreased  revenues  were (a) revenue  received in 1995
related to storage and  transportation  contract  settlements of $19 million and
$22.5 million for the three- and nine-month periods,  respectively,  (b) reduced
surcharge  and other  pass-through  recoveries of $5.7 million and $15.5 million
for the three- and nine-month periods, respectively, which are offset in cost of
gas and operation  and  maintenance,  and (c)  increases in provisions  for rate
related  contingencies  of $15.7  million  and $15.2  million for the three- and
nine-month  periods,  respectively.  Provisions  were  $16.8  million  and $29.4
million  for the  three-  and  nine-month  periods  ended  September  30,  1996,
respectively, while the same periods in 1995 included provisions of $1.1 million
and $14.2 million.

     Gas sales revenues  decreased for the three- and  nine-month  periods ended
September  30, 1996 as compared to the same  periods in 1995 by $3.8 million and
$21.1  million,  respectively.  The  decrease  for  the  nine-month  period  was
primarily due to purchased gas adjustment  recoveries of $12.1 million  recorded
in 1995,  which were associated  with purchase  periods prior to Order 636. Such
recoveries  were  largely  completed in 1995. A reduction in the quantity of gas
auctioned on the open market,  as discussed  above,  offset in part by increased
spot market prices,  further reduced gas sales revenues by $2.2 million and $8.5
million for the three- and nine-month periods, respectively.

                                     - 10 -
<PAGE>

     Other revenues  decreased for the  three-month  period ended  September 30,
1996 by $4.4 million and increased for the nine-month period ended September 30,
1996 by $9.1 million as compared to the same periods in 1995.  Additional equity
earnings from investments in pipeline  partnerships  increased other revenues by
$4.7  million  and  $4.3  million  for  the  three-  and   nine-month   periods,
respectively,  largely due to an increase in the Company's ownership interest in
Iroquois Gas Transmission  System,  L.P. from 9.4% to 16%. Revenue from the sale
of storage  gas during 1995  decreased  other  revenues  by $4.6  million and $5
million  for the three-  and  nine-month  periods,  respectively.  Decreases  in
interest  income from a related party reduced other revenues for the three-month
period by $1.3  million,  while  activity  on a  nine-month  basis  resulted  in
increased  revenues of $3.6 million.  Also  contributing  to the increase in the
nine-month period were gains on the sale of certain assets of $7.9 million.

     Operation and Maintenance. Operation and maintenance expenses decreased for
the three- and  nine-month  periods ended  September 30, 1996 as compared to the
same  periods in 1995 by $20.2  million  and $26.5  million,  respectively.  The
decreases  were  primarily due to reduced  transportation  services  provided by
others of $14 million and $17.1 million for the three- and  nine-month  periods,
which were offset in revenues,  as discussed  above.  Also  contributing  to the
decrease were lower salary and benefit expenses of $1.8 million and $7.1 million
for the  three- and  nine-month  periods,  respectively,  mainly due to an early
retirement incentive program which became effective December 31, 1995.

     Cost of Gas. Cost of gas decreased  for the three- and  nine-month  periods
ended  September  30,  1996 as  compared  to the same  periods  in 1995 by $10.9
million and $27.9  million,  respectively.  Reductions  in the  amortization  of
previously  deferred  costs  associated  with above market gas purchases of $6.8
million  and  $11.1  million  and in the  quantity  of gas  purchased  under the
Company's  remaining gas purchase  contracts of $2.6 million and $9 million both
decreased the cost of gas for the three- and nine-month  periods,  respectively.
Additionally,  the  nine-month  period  was  impacted  by  a  reduction  in  the
amortization of purchased gas adjustment  costs of $14.8 million.  Collectively,
these decreases were offset in revenues, as discussed above.

     Taxes on Income.  Income  taxes  decreased  for the  three- and  nine-month
periods ended September 30, 1996 as compared to the same periods in 1995 by $8.7
million and $9.3 million,  respectively,  primarily due to a decrease in pre-tax
income.

Item 2.B.  Other Developments.

     On October 25,  1996,  the Company  filed an  application  with the FERC to
construct  and operate 37 miles of offshore  and onshore  pipeline  looping at a
cost of $51.2 million.  The project is to be located between Eugene Island Block
63 and  Patterson,  Louisiana,  providing  ANR Pipeline  with the  capability to
access a significant  portion of gas being produced from new deep-water  regions
in the Gulf of Mexico.  The proposed  facilities  would add up to a total of 461
Mmcf per day to the offshore Louisiana production the Company currently delivers
and could be in service by August 1998,  subject to receipt of necessary federal
regulatory approvals.


                                     - 11 -
<PAGE>

                                     PART II

                                OTHER INFORMATION


Item 1.     Legal Proceedings.

            The information required hereunder is incorporated by reference into
Part II of this Report from Note 4 of Notes to Consolidated Financial Statements
set forth in Part I of this Report and from Item 2.A.,  "Management's Discussion
and Analysis of Financial  Condition and Results of  Operations -  Environmental
Matters," set forth in Part I of this Report.

Item 2.     Changes in Securities.

            None.

Item 3.     Defaults Upon Senior Securities.

            None.

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

            None.

Item 5.     Other Information.

            None.

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

            (a) Exhibits.

                (27)  Financial Data Schedule.

            (b) Reports on Form 8-K.

                No  reports  on Form 8-K were filed  during  the  quarter  ended
                September 30, 1996.


                                   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.

                                                    ANR PIPELINE COMPANY
                                                         (Registrant)

Date:  November 13, 1996                   By:       WILLIAM L. JOHNSON
                                               ------------------------------
                                                     William L. Johnson
                                                       Vice President
                                                       and Controller
                                                 (As Authorized Officer and
                                                  Chief Accounting Officer)

                                     - 12 -
<PAGE>

                                INDEX TO EXHIBITS


Exhibit
Number                               Description
------------------------------------------------------------------------------

  27      Financial Data Schedule




                                     - 13 -