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


                       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

                  For the Quarterly Period Ended June 30, 2002

                                       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 001-05083

                               XANSER CORPORATION
             (Exact name of registrant as specified in its charter)

           DELAWARE                                               74-1191271
(State or other jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)


                          2435 North Central Expressway
                             Richardson, Texas 75080
          (Address of principal 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
             -------                                           -------

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

Class of Common Stock                               Outstanding at July 31, 2002
---------------------                               ----------------------------
   No par value                                          31,704,114 shares

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

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES


FORM 10-Q
QUARTER ENDED JUNE 30, 2002
--------------------------------------------------------------------------------



                                                                        Page No.
                           Part I. Financial Information

Item 1.  Financial Statements (Unaudited)

         Consolidated Statements of Operations - Three and
           Six Month Periods Ended June 30, 2002 and 2001                  1

         Condensed Consolidated Balance Sheets - June 30, 2002
           and December 31, 2001                                           3

         Condensed Consolidated Statements of Cash Flows - Six
           Months Ended June 30, 2002 and 2001                             4

         Notes to Consolidated Financial Statements                        5

Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations                  13

Item 3.  Quantitative and Qualitative Disclosure About Market Risk        18


                           Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K                                 18





<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                          Three Months Ended                Six Months Ended
                                                               June 30,                         June 30,
                                                     -----------------------------    -----------------------------
                                                          2002           2001              2002           2001
                                                     -------------   -------------    -------------  --------------
<S>                                                  <C>             <C>              <C>            <C>
Revenues:
   Services                                          $      28,454   $      32,223    $      55,327  $       65,107
   Products                                                  3,959           6,501            5,254           9,509
                                                     -------------   -------------    -------------  --------------
         Total revenues                                     32,413          38,724           60,581          74,616
                                                     -------------   -------------    -------------  --------------
Costs and expenses:
   Operating costs                                          27,773          29,358           54,277          58,638
   Cost of products sold                                     3,833           5,795            5,064           8,472
   Depreciation and amortization                             1,019           1,276            1,903           2,527
   General and administrative                                  943             907            1,888           2,067
                                                     -------------   -------------    -------------  --------------
         Total costs and expenses                           33,568          37,336           63,132          71,704
                                                     -------------   -------------    -------------  --------------

Operating income (loss)                                     (1,155)          1,388           (2,551)          2,912

Other income (expense), net                                    112            (161)             249            (168)
Interest expense                                              (408)           (811)            (918)         (1,696)
                                                     -------------   -------------    -------------  --------------
Income (loss) from continuing operations
   before income taxes and cumulative
   effect of change in accounting principle                 (1,451)            416           (3,220)          1,048
Income tax benefit                                             878             269            1,733              10
                                                     -------------   -------------    -------------  --------------
Income (loss) from continuing operations
   before cumulative effect of change in
   accounting principle                                       (573)            685           (1,487)          1,058

Cumulative effect of change in accounting
   principle - adoption of new accounting
   standard for goodwill (note 7)                             -              -              (45,269)          -
                                                     -------------   -------------    -------------  --------------
Income (loss) from continuing operations                      (573)            685          (46,756)          1,058

Income from discontinued operations -
   businesses distributed to common
   shareholders, net of income taxes                          -              2,766             -              3,423
                                                     -------------   -------------    -------------  --------------
Net income (loss)                                             (573)          3,451          (46,756)          4,481

Dividends and redemption premium
   applicable to preferred stock                              -              -                 -                493
                                                     -------------   -------------    -------------  --------------
Net income (loss) applicable to
   common stock                                      $        (573)  $       3,451    $     (46,756) $        3,988
                                                     =============   =============    =============  ==============

</TABLE>



                 See notes to consolidated financial statements.
                                        1


<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(In Thousands - Except Per Share Amounts)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                          Three Months Ended                Six Months Ended
                                                               June 30,                         June 30,
                                                     -----------------------------    -----------------------------
                                                          2002           2001              2002           2001
                                                     -------------   -------------    -------------  --------------
<S>                                                  <C>             <C>               <C>           <C>
Earnings (loss) per common share:
   Basic:
     Continuing operations:
       Before cumulative effect of change
         in accounting principle                     $       (.02)   $         .02    $       (.04)  $          .02
       Cumulative effect of change in
         accounting principle                                 -              -               (1.36)           -
                                                     ------------    ------------     ------------   --------------
                                                             (.02)             .02           (1.40)             .02
     Discontinued operations                                  -                .09             -                .11
                                                     ------------    -------------    ------------   --------------
                                                     $       (.02)   $         .11    $      (1.40)  $          .13
                                                     ============    =============    ============   ==============
   Diluted:
     Continuing operations:
       Before cumulative effect of change
         in accounting principle                     $       (.02)   $         .02    $       (.04)  $          .02
       Cumulative effect of change in
         accounting principle                                 -              -               (1.36)           -
                                                     ------------    -------------    ------------   --------------
                                                             (.02)             .02           (1.40)             .02
     Discontinued operations                                  -                .08             -                .10
                                                     ------------    -------------    ------------   --------------
                                                     $       (.02)   $         .10    $      (1.40)  $          .12
                                                     ============    =============    ============   ==============
</TABLE>



                 See notes to consolidated financial statements.
                                        2

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                            June 30,                December 31,
                                                                              2002                      2001
                                                                       -----------------         ------------------
                                                                           (Unaudited)
                   ASSETS
<S>                                                                        <C>                       <C>
Current assets:
    Cash and cash equivalents                                              $      28,546             $       29,545
    Accounts receivable, trade                                                    34,826                     37,186
    Receivable from businesses distributed to common
      shareholders                                                                 7,568                     17,904
    Inventories                                                                    8,432                      8,942
    Prepaid expenses and other                                                     4,880                      7,532
    Current deferred income tax assets                                               102                      2,300
                                                                           -------------             --------------
       Total current assets                                                       84,354                    103,409
                                                                           -------------             --------------

Property and equipment                                                            36,699                     33,381
Less accumulated depreciation and amortization                                    24,397                     21,995
                                                                           -------------             --------------
     Net property and equipment                                                   12,302                     11,386
                                                                           -------------             --------------

Excess of cost over fair value of net assets
     of acquired businesses (note 7)                                              13,802                     61,054

Deferred income taxes and other assets                                            16,531                     10,370
                                                                           -------------             --------------
                                                                           $     126,989             $      186,219
                                                                           =============             ==============
     LIABILITIES AND EQUITY
Current liabilities:
    Current portion of long-term debt                                      $       2,131             $        2,173
    Accounts payable                                                               4,204                      6,205
    Accrued expenses                                                              12,865                     13,159
    Accrued income taxes                                                           9,593                     10,083
                                                                           -------------             --------------
      Total current liabilities                                                   28,793                     31,620
                                                                           -------------             --------------

Long-term debt, less current portion:
    Technical services                                                            17,720                     17,871
    Parent company                                                                 9,930                     19,930
                                                                           -------------             --------------
         Total long-term debt, less current portion                               27,650                     37,801
                                                                           -------------             --------------

Other liabilities                                                                  1,571                      1,292

Commitments and contingencies

Stockholders' equity:
    Common stock, without par value                                                4,326                      4,270
    Additional paid-in-capital                                                   129,174                    128,744
    Treasury stock, at cost                                                      (24,575)                   (23,423)
    Retained earnings (accumulated deficit) (note 7)                             (34,835)                    11,921
    Accumulated other comprehensive income (loss)                                 (5,115)                    (6,006)
                                                                           -------------             --------------
         Total stockholders' equity                                               68,975                    115,506
                                                                           -------------             --------------
                                                                           $     126,989             $      186,219
                                                                           =============             ==============
</TABLE>

                 See notes to consolidated financial statements.
                                        3

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                            Six Months Ended
                                                                                                 June 30,
                                                                                  ---------------------------------
                                                                                      2002               2001
                                                                                  -------------      --------------
<S>                                                                               <C>                <C>
Operating activities:
  Income (loss) from continuing operations                                        $     (46,756)     $        1,058
   Adjustments to reconcile income (loss) from continuing
     operations to net cash provided by operating activities:
       Depreciation and amortization                                                      1,903               2,527
       Deferred income taxes                                                             (1,696)                (60)
       Cumulative effect of change in accounting principle                               45,269               -
       Other, net                                                                           384                  28
       Changes in working capital components                                              2,737              (4,298)
                                                                                  -------------      --------------
       Operating activities of continuing operations                                      1,841                (745)
       Operating activities of discontinued operations                                   -                   59,798
                                                                                  -------------      --------------
         Net cash provided by operating activities                                        1,841              59,053
                                                                                  -------------      --------------

Investing activities:
   Capital expenditures                                                                  (2,181)             (2,035)
   Change in other assets, net                                                              346                (612)
   Investing activities of discontinued operations                                        -                (128,339)
                                                                                  -------------      --------------
       Net cash used in investing activities                                             (1,835)           (130,986)
                                                                                  -------------      --------------

Financing activities:
   Issuance of debt                                                                       2,238               1,409
   Payments on debt                                                                     (12,606)             (1,622)
   Preferred stock dividends and redemption premium paid                                  -                    (493)
   Common stock issued                                                                      479                 526
   Purchase of treasury stock                                                            (1,452)              -
   Redemption of preferred stock                                                          -                  (5,680)
   Decrease in receivable from businesses distributed
     to common shareholders                                                              10,336               -
   Financing activities of discontinued operations                                        -                  71,000
                                                                                  -------------      --------------
       Net cash provided by (used in) financing activities                               (1,005)             65,140
                                                                                  -------------      --------------

Decrease in cash and cash equivalents                                                      (999)             (6,793)
Cash and cash equivalents at beginning of period                                         29,545              20,517
                                                                                  -------------      --------------
Cash and cash equivalents at end of period                                        $      28,546      $       13,724
                                                                                  =============      ==============
Supplemental cash flow information:
   Cash paid for interest                                                         $       1,460      $        1,633
                                                                                  =============      ==============
   Cash paid for income taxes                                                     $         616      $          735
                                                                                  =============      ==============
</TABLE>

                 See notes to consolidated financial statements.
                                        4

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

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


1.   SIGNIFICANT ACCOUNTING POLICIES

     The condensed  consolidated  financial  statements  include the accounts of
     Xanser Corporation (the "Company") and its subsidiaries.  On June 29, 2001,
     the Company  distributed its pipeline,  terminaling  and product  marketing
     businesses (the  "Distribution")  to its stockholders in the form of shares
     of a new limited liability company,  Kaneb Services LLC. As a result of the
     Distribution,  the accompanying condensed consolidated financial statements
     reflect the operations of the pipeline,  terminaling and product  marketing
     businesses  of  the  Company  prior  to  June  29,  2001  as  "Discontinued
     operations  -  businesses   distributed   to  common   shareholders".   All
     significant  intercompany  transactions  and  balances  are  eliminated  in
     consolidation.


     The unaudited condensed  consolidated  financial  statements of the Company
     for the three and six month periods ended June 30, 2002 and 2001, have been
     prepared in accordance with accounting principles generally accepted in the
     United States of America.  Significant  accounting policies followed by the
     Company are disclosed in the notes to the consolidated financial statements
     included  in the  Company's  Annual  Report on Form 10-K for the year ended
     December  31,  2001.  In the  opinion  of  the  Company'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  Company  and  its
     consolidated  subsidiaries at June 30, 2002 and the consolidated results of
     their  operations  and cash flows for the  periods  ended June 30, 2002 and
     2001.  Operating  results for the three and six months  ended June 30, 2002
     are not necessarily  indicative of the results that may be expected for the
     year ending December 31, 2002.


2.   COMPREHENSIVE INCOME

     Comprehensive  income for the three and six months  ended June 30, 2002 and
     2001 is as follows:

<TABLE>
<CAPTION>
                                                          Three Months Ended                Six Months Ended
                                                                June 30,                        June 30,
                                                     -----------------------------    -----------------------------
                                                          2002            2001             2002           2001
                                                     -------------   -------------    -------------  --------------
                                                                             (in thousands)
<S>                                                  <C>             <C>              <C>            <C>
     Net income (loss)                               $        (573)  $       3,451    $     (46,756) $        4,481
     Foreign currency translation
        adjustment                                           1,272            (393)             891          (1,264)
                                                     -------------   -------------    -------------  --------------
     Comprehensive income (loss)                     $         699   $       3,058    $     (45,865) $        3,217
                                                     =============   =============    =============  ==============

</TABLE>

<PAGE>
3.   EARNINGS PER SHARE


     The following is a reconciliation  of Basic and Diluted earnings (loss) per
     share from  continuing  operations  before  cumulative  effect of change in
     accounting principle (in thousands, except for per share amounts):
<TABLE>
<CAPTION>

                                                                                    Weighted
                                                                                     Average
                                                                   Net               Common           Per-Share
                                                              Income (loss)          Shares             Amount
                                                             ---------------     ---------------   ----------------
<S>                                                          <C>                 <C>               <C>
     Three Months Ended June 30, 2002
     --------------------------------
         Basic earnings per share -
           Income (loss) from continuing
           operations applicable to common
           stock before cumulative effect
           of change in accounting principle                 $          (573)             33,379   $       (.02)
                                                                                                   ============
         Effect of dilutive securities                                   -                   -
                                                             ---------------     ---------------
         Diluted earnings per share -
           Income (loss) from continuing operations
           applicable to common stock before cumulative
           effect of change in accounting principle          $          (573)             33,379   $       (.02)
                                                             ===============     ===============   ============
     Three Months Ended June 30, 2001
     --------------------------------
         Basic earnings per share -
           Income from continuing
           operations applicable to
           common stock                                      $           685              31,175   $        .02
                                                                                                   ============
         Effect of dilutive securities                                   -                 2,887
                                                             ---------------     ---------------
         Diluted earnings per share -
              Income applicable to common stock              $           685              34,062   $        .02
                                                             ===============     ===============   ============

     Six Months Ended June 30, 2002
     ------------------------------
         Basic earnings per share -
           Income (loss) from continuing
           operations applicable to common
           stock before cumulative effect
           of change in accounting principle                 $        (1,487)             33,343   $       (.04)
                                                                                                   ============
         Effect of dilutive securities                                   -                   -
                                                             ---------------     ---------------
         Diluted earnings per share -
           Income (loss) from continuing
           operations applicable to common
           stock before cumulative effect
           of change in accounting principle                 $        (1,487)             33,343   $       (.04)
                                                             ===============     ===============   ============

     Six Months Ended June 30, 2001
     ------------------------------
         Income from continuing operations                   $         1,058
         Dividends and redemption premium
           applicable to preferred stock                                (493)
                                                             ---------------
         Basic earnings per share -
           Income from continuing
           operations applicable to
           common stock                                                  565              31,159   $        .02
                                                                                                   ============
         Effect of dilutive securities                                   -                 2,871
                                                             ---------------     ---------------
         Diluted earnings per share -
           Income applicable to common stock                 $           565              34,030   $        .02
                                                             ===============     ===============   ============
</TABLE>

     As a result of the losses from continuing  operations  applicable to common
     stock for the three and six month  periods  ended June 30, 2002,  all stock
     options and the Company's 8.75%  convertible  subordinated  debentures were
     excluded  from the  computation  of diluted  earnings per share because the
     effects  would be  anti-dilutive.  Since the average  market  prices of the
     Company's  common stock for the three and six month  periods ended June 30,
     2001 were in excess of outstanding  option exercise prices, all outstanding
     options  were  considered  dilutive  at June 30,  2001.  Additionally,  the
     Company's 8.75% convertible  subordinated debentures were excluded from the
     computation  of  diluted  earning  per  share  for the  three and six month
     periods  ended June 30, 2001  because the effect of assumed  conversion  is
     anti-dilutive.


4.   CONTINGENCIES

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



5.   BUSINESS SEGMENT DATA

     The Company provides  technical  services to an  international  client base
     that includes refineries, chemical plants, pipelines, offshore drilling and
     production  platforms,  steel mills, food and drink processing  facilities,
     power generation, and other process industries. Additionally, the Company's
     information  technology  services  segment  provides  consulting  services,
     hardware  sales and other related  information  management  and  processing
     services primarily to insurance and financial institutions,  the government
     and  healthcare  sectors.   General  corporate  includes  compensation  and
     benefits paid to officers and employees of the Company, insurance premiums,
     general and administrative  costs, tax and financial reporting costs, legal
     and audit fees not  reasonably  allocable  to specific  business  segments.
     General corporate assets include cash,  deferred taxes and other assets not
     related to the Company's segments.

     The Company measures segment profit as operating  income.  Total assets are
     those  assets,  including  excess  of cost  over  fair  value  of  acquired
     businesses, controlled by each reportable segment. Business segment data is
     as follows:
<TABLE>
<CAPTION>
                                                         Three Months Ended                Six Months Ended
                                                              June 30,                         June 30,
                                                     -----------------------------    -----------------------------
                                                          2002           2001              2002           2001
                                                     -------------   -------------    -------------  --------------
                                                                             (in thousands)
<S>                                                  <C>             <C>              <C>            <C>
     Business segment revenues:
        Technical services                           $      22,171   $      24,105    $      42,640  $       48,666
        Information technology services                     10,242          14,619           17,941          25,950
                                                     -------------   -------------    -------------  --------------
                                                     $      32,413   $      38,724    $      60,581  $       74,616
                                                     =============   =============    =============  ==============
     Technical services segment revenues:
        Underpressure services                       $      10,018   $      10,052    $      19,982  $       19,596
        Turnaround services                                 10,398          12,405           18,994          24,907
        Other services                                       1,755           1,648            3,664           4,163
                                                     -------------   -------------    -------------  --------------
                                                     $      22,171   $      24,105    $      42,640  $       48,666
                                                     =============   =============    =============  ==============
     Business segment profit:
        Technical services                           $         974   $       1,200    $       1,187  $        2,513
        Information technology services                     (1,186)          1,095           (1,850)          2,466
        General corporate                                     (943)           (907)          (1,888)         (2,067)
                                                     -------------   -------------    -------------  --------------
           Operating income (loss)                          (1,155)          1,388           (2,551)          2,912
        Other income (expense), net                            112            (161)             249            (168)
        Interest expense                                      (408)           (811)            (918)         (1,696)
                                                     -------------   -------------    -------------  --------------
        Income (loss) from continuing
           operations before income taxes
           and cumulative effect of change
           in accounting principle                   $      (1,451)  $         416    $      (3,220) $        1,048
                                                     =============   =============    =============  ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                                                         June 30,      December 31,
                                                                                           2002           2001
                                                                                      ------------- -----------------
                                                                                             (in thousands)
<S>                                                                                   <C>            <C>
     Total assets:
        Technical services                                                            $      64,716  $      102,147
        Information technology services                                                      21,379          30,877
        General corporate                                                                    40,894          53,195
                                                                                      -------------  --------------
                                                                                      $     126,989  $      186,219
                                                                                      =============  ==============
</TABLE>


6.   DISCONTINUED OPERATIONS - BUSINESSES DISTRIBUTED TO COMMON SHAREHOLDERS


     The  results  of  operations  for the  pipeline,  terminaling  and  product
     marketing  businesses prior to the Distribution  (see Note 1) are reflected
     in the accompanying condensed consolidated  statements of income as "Income
     from   discontinued   operations   -  businesses   distributed   to  common
     shareholders".  The  pipeline  and  terminaling  operations  are  conducted
     through Kaneb Pipe Line Partners,  L.P. ("KPP"), in which the Company owned
     an effective 2% general partner  interest and 25% limited partner  interest
     prior to the Distribution  (see Note 1). A summary of operating  results of
     the   discontinued   operations   included  in  the   Company's   condensed
     consolidated financial statements for the three and six month periods ended
     June 30, 2001 is presented below:

<TABLE>
<CAPTION>
                                                                                 Three Months         Six Months
                                                                                     Ended               Ended
                                                                                 June 30, 2001       June 30, 2001
                                                                              ------------------  ----------------
                                                                                          (in thousands)
<S>                                                                             <C>                <C>
       Revenues:
         Pipeline and terminaling services                                      $        52,952    $        101,021
         Product marketing services                                                      98,879             187,231
                                                                                ---------------    ----------------
                                                                                $       151,831    $        288,252
                                                                                ===============    ================
       Operating profit:
         Pipeline and terminaling services                                      $        21,602    $         39,896
         Product marketing services                                                         511                (264)
         Distribution expenses                                                           (1,529)             (1,779)
                                                                                ---------------    ----------------
                                                                                $        20,584    $         37,853
                                                                                ===============    ================

       Income before income taxes, interest
         of outside non-controlling partners
         in KPP's net income and
         extraordinary item                                                     $        20,365    $         32,797
       Income taxes                                                                      (1,890)             (3,148)
       Interest of outside non-controlling
         partners in KPP's net income                                                   (15,709)            (25,367)
       Extraordinary loss on KPP debt
         extinguishment, net of income
         taxes and interest of outside non-
         controlling partners in KPP's
         net income                                                                      -                     (859)
                                                                                ---------------    ----------------
       Income from discontinued operations,
         net of income taxes                                                    $         2,766    $          3,423
                                                                                ===============    ================
</TABLE>

<PAGE>
7.   ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS

     Effective  January 1, 2002,  the Company  adopted  Statement  of  Financial
     Accounting  Standards  ("SFAS")  No. 142,  "Goodwill  and Other  Intangible
     Assets",  which  eliminates the  amortization  for goodwill (excess of cost
     over fair value of net assets of acquired  businesses) and other intangible
     assets with indefinite  lives.  Under SFAS No. 142,  intangible assets with
     lives restricted by contractual,  legal, or other means will continue to be
     amortized over their useful lives.  As of June 30, 2002, the Company had no
     intangible assets subject to amortization  under SFAS No. 142. Goodwill and
     other  intangible  assets  not  subject  to  amortization  are  tested  for
     impairment   annually   or  more   frequently   if  events  or  changes  in
     circumstances  indicate  that the assets  might be  impaired.  SFAS No. 142
     requires a two-step process for testing  impairment.  First, the fair value
     of each  reporting  unit is compared  to its  carrying  value to  determine
     whether an indication of impairment  exists. If an impairment is indicated,
     then second,  the implied fair value of the  reporting  unit's  goodwill is
     determined  by  allocating   the  unit's  fair  value  to  its  assets  and
     liabilities  (including  any  unrecognized  intangible  assets)  as if  the
     reporting unit had been acquired in a business  combination.  The amount of
     impairment  for  goodwill  and other  intangible  assets is measured as the
     excess  of its  carrying  value  over  its  implied  fair  value.  Based on
     valuations and analysis performed by independent  valuation consultants and
     the Company in the first quarter of 2002, the Company  determined  that the
     carrying value of its goodwill  exceeded implied fair value, and therefore,
     the  Company  recorded a non-cash  charge,  after  income  taxes,  of $45.3
     million as the cumulative  effect of a change in accounting  principle.  No
     impairment charge was appropriate  under the previous  goodwill  impairment
     standard (SFAS No. 121), which was based on undiscounted cash flows.

     The changes in the carrying amount of excess of cost over fair value of net
     assets  of  acquired  businesses  as of June  30,  2002 is as  follows  (in
     thousands):

     Excess of cost over fair value of net assets of acquired
        businesses at December 31, 2001                           $      61,054

     Cumulative effect of change in accounting principle
        recorded in the first quarter of 2002                           (47,252)
                                                                  -------------
     Excess of cost over fair value of net assets of acquired
        businesses at June 30, 2002                               $      13,802
                                                                  =============

<PAGE>
     The pro forma effects of the adoption of SFAS No. 142 on income (loss) from
     continuing  operations  is as  follows  (in  thousands  - except  per share
     amounts):
<TABLE>
<CAPTION>
                                                         Three Months Ended                Six Months Ended
                                                              June 30,                         June 30,
                                                     -----------------------------    -----------------------------
                                                          2002           2001              2002           2001
                                                     -------------   -------------    -------------  --------------
<S>                                                  <C>             <C>              <C>            <C>
     Reported income (loss) from
        continuing operations                        $        (573)  $         685    $     (46,756) $        1,058
     Amortization of excess of cost
        over fair value of net assets
        of acquired businesses, net
        of income taxes                                       -                541             -              1,083
     Cumulative effect of change in
        accounting principle - adoption
        of new accounting standard
        for goodwill                                          -              -               45,269           -
                                                     -------------   -------------    -------------  --------------
     Adjusted income (loss) from
        continuing operations                        $        (573)  $       1,226    $      (1,487) $        2,141
                                                     =============   =============    =============  ==============

     Reported diluted earnings (loss)
        per common share from
        continuing operations                        $       (0.02)  $       0.02     $       (1.40) $        0.02
     Amortization of excess of cost over
        fair value of net assets of
        acquired businesses, net of
        income taxes                                          -              0.02              -              0.03
     Cumulative effect of change in
        accounting principle                                  -              -                 1.36           -
                                                     -------------   -------------    -------------  --------------
     Adjusted diluted earnings (loss)
        per common share from
        continuing operations                        $       (0.02)  $       0.04     $       (0.04) $        0.05
                                                     =============   ============     =============  =============

</TABLE>

     Additionally,  effective  January 1, 2002, the Company adopted SFAS No. 144
     "Accounting  for the  Impairment or Disposal of Long-Lived  Assets",  which
     addresses financial accounting and reporting for the impairment or disposal
     of long-lived  assets.  The adoption of SFAS No. 144, which superceded SFAS
     No.  121,  did not have a  material  impact on the  condensed  consolidated
     financial statements of the Company.




<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

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

     This  discussion   should  be  read  in  conjunction   with  the  condensed
     consolidated financial statements of Xanser Corporation (the "Company") and
     notes thereto included elsewhere in this report.

     Operating Results:


     Technical Services

     This business segment provides specialized  industrial services,  including
     underpressure  leak  sealing,  on-site  machining,  safety and relief valve
     testing  and  repair,   passive  fire  protection  and  fugitive  emissions
     inspections to the process and power industry worldwide.
<TABLE>
<CAPTION>

                                                       Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                   ---------------------------      ------------------------------
                                                      2002             2001             2002            2001
                                                   -----------     -----------      -------------   --------------
                                                                          (in thousands)
<S>                                                <C>             <C>              <C>             <C>
     Revenues:
         United States                             $     6,190     $     9,298      $      13,442   $       19,032
         Europe                                         13,480          12,337             24,117           24,069
         Asia-Pacific                                    2,501           2,470              5,081            5,565
                                                   -----------     -----------      -------------   --------------
              Total Revenues                       $    22,171     $    24,105      $      42,640   $       48,666
                                                   ===========     ===========      =============   ==============
     Operating income:
         United States                             $      (456)    $       365      $        (591)  $          976
         Europe                                          1,740           1,874              2,406            3,385
         Asia-Pacific                                      100             (70)               223               87
         Headquarters                                     (410)           (969)              (851)          (1,935)
                                                   -----------     -----------      -------------   --------------
              Total operating income               $       974     $     1,200      $       1,187   $        2,513
                                                   ===========     ===========      =============   ==============
     Capital expenditures,
         excluding acquisitions                    $       221     $       935      $         852   $        1,740
                                                   ===========     ===========      =============   ==============

</TABLE>

     For the three  months  ended  June 30,  2002,  revenues  for the  technical
     services  business  decreased by $1.9 million,  or 8%, when compared to the
     same 2001 period as improvements in Europe and Asia-Pacific  were more than
     offset by  declines  in  America.  In the  United  States,  second  quarter
     revenues decreased by $3.1 million,  or 33%, compared to the same period in
     2001, due to decreases in leaksealing  and turnaround  services,  partially
     offset by increases in other process plant  services.  In Europe,  revenues
     increased by $1.1 million,  or 9%, when  compared to the second  quarter of
     2001 period, due to increases in leaksealing  services and foreign currency
     exchange  differences,  partially  offset by decreases in product sales. In
     Asia-Pacific, revenues increased slightly due to increases in product sales
     and  foreign  currency  exchange   differences,   substantially  offset  by
     decreases in underpressure and turnaround services.

     For the six months ended June 30, 2002, revenues decreased by $6.0 million,
     or 12%, when compared to 2001,  due to the impact of the economic  downturn
     on its customers'  business.  Revenues in the United States  decreased $5.6
     million,  or 29%,  compared to 2001, due to decreases in underpressure  and
     turnaround  services,  partially offset by increases in other process plant
     services.  In  Europe,  revenues  were  flat as  increases  in  leaksealing
     services  and  differences  in  foreign  exchange  rates  more than  offset
     decreases in turnaround services, other process services and product sales.
     Asia-Pacific  revenues decreased $0.5 million, or 9%, compared to 2001, due
     to  decreases  in  product   sales,   partially   offset  by  increases  in
     underpressure services and foreign currency exchange rates.

     Overall,  technical services operating income decreased by $0.2 million, or
     19%, for the three months  ended June 30, 2002,  when  compared to the same
     2001  period.  In the United  States,  operating  income  decreased by $0.8
     million, compared to the same period in 2001, due to the lower revenues. In
     Europe,  operating  income  declined  $0.1  million,  or 7%, as a favorable
     pension  cost  adjustment  recorded  in the second  quarter of 2001 was not
     totally offset by the margins resulting from increased revenues in 2002. In
     Asia-Pacific,  operating  income  increased  $0.2  million due to increased
     revenues and lower costs.

     Operating  income  decreased  by $1.3  million,  or 53%, for the six months
     ended June 30, 2002,  when compared to the same 2001 period.  In the United
     States,  operating income  decreased by $1.6 million,  compared to the same
     period in 2001,  due to the lower  revenues.  In Europe,  operating  income
     decreased by $1.0 million,  or 29%,  compared to the same 2001 period,  due
     primarily  to a favorable  pension  cost  adjustment  recorded in 2001.  In
     Asia-Pacific, operating income increased $0.1 million, compared to the same
     2001 period, due to higher operating margins,  which more than offset lower
     revenues.

     Headquarters  costs for the three and six month periods ended June 30, 2001
     includes  $0.5  million and $1.0  million,  respectively,  of  amortization
     related  to  excess  of cost over  fair  value of net  assets  of  acquired
     businesses.  In the first quarter of 2002, the Company adopted Statement of
     Financial  Accounting  Standards  "(SFAS")  No.  142  "Goodwill  and  Other
     Intangible  Assets" which eliminates the amortization of goodwill and other
     intangible   assets  with  indefinite   lives  (see  Note  7  to  condensed
     consolidated financial statements).




<PAGE>
     Information Technology Services

     The information  technology  services group provides  knowledge  management
     services to the commercial (financial and insurance),  government (federal,
     state,  county and  local) and  healthcare  sectors.  The group  focuses on
     evaluating  customer's  people  (employees  and  customers),  processes and
     technology to develop solutions that helps them achieve better outcomes and
     results.  Services are tailored to the specific  needs of the customers and
     include  consulting,  design,  development,   integration  of  third  party
     hardware,  maintenance,  training and customer service of custom technology
     solutions.

<TABLE>
<CAPTION>
                                                       Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                   ---------------------------      ------------------------------
                                                      2002             2001             2002            2001
                                                   -----------     -----------      -------------   --------------
                                                                          (in thousands)

<S>                                                <C>             <C>              <C>             <C>
     Revenues                                      $    10,242     $    14,619      $      17,941   $       25,950
                                                   ===========     ===========      =============   ==============
     Operating income (loss)                       $    (1,186)    $     1,095      $      (1,850)  $        2,466
                                                   ===========     ===========      =============   ==============
     Capital expenditures,
         excluding acquisitions                    $       636     $       236      $       1,329   $          295
                                                   ===========     ===========      =============   ==============
</TABLE>


     For the three and six month  periods  ended June 30, 2002,  total  revenues
     decreased  $4.4 million,  or 30%, and $8.0 million,  or 31%,  respectively,
     when compared to the same 2001 periods.  Service revenues  decreased in the
     second  quarter and first half of 2002,  compared to the same 2001 periods,
     primarily  due to  lower  voice  and  data  service  revenues  from a large
     customer, partially offset by increases in other service revenues. Revenues
     from  equipment  sales,  furnished  at the request of  selected  customers,
     decreased  in the second  quarter  and first half of 2002,  compared to the
     same 2001 periods, due to normal fluctuations in customer needs.

     Information technology services operating income decreased $2.3 million and
     $4.3  million  for the three and six month  periods  ended  June 30,  2002,
     respectively,  compared to the same 2001 periods, due to lower revenues and
     planned investments in management, marketing and product development costs.

     Information  technology  services  operating  income  for the three and six
     month  periods  ended June 30, 2002 includes $0.1 million and $0.2 million,
     respectively,  of amortization related to excess of cost over fair value of
     net  assets of  acquired  businesses.  In the first  quarter  of 2002,  the
     Company adopted SFAS No. 142 which  eliminates the amortization of goodwill
     and other intangible  assets with indefinite lives (see Note 7 to condensed
     consolidated financial statements).


     Interest Expense

     Interest  expense  decreased  $0.4  million and $0.8  million for the three
     month and six month periods ended June 30, 2002, respectively,  compared to
     the same periods in 2001, due to a decrease in debt levels (see  "Liquidity
     and Capital Resources") combined with lower interest rates on borrowings.


     Liquidity and Capital Resources

     During  the  first  six  months  of 2002,  the  Company's  working  capital
     requirements  for operations and capital  expenditures  were funded through
     the use of internally generated funds.

     Cash provided by operating  activities from continuing  operations was $1.8
     million and ($0.7) million for the six months ended June 30, 2002 and 2001,
     respectively.  The  increase was due to normal  changes in working  capital
     components  resulting  from the timing of cash receipts and  disbursements,
     partially offset by decreases in revenues and operating income.

     Capital  expenditures  for continuing  operations were $2.2 million for the
     six months  ended June 30,  2002,  compared  to $2.0  million in 2001.  The
     Company  expects  to fund  maintenance  capital  expenditures  in 2002 with
     existing cash and anticipated cash funds from operations.

     On August 13, 2002, a wholly-owned subsidiary of the Company entered into a
     $25 million  Amended and Restated Bank Loan  Agreement  ("Loan  Agreement")
     that  provides  working  capital for the  technical  services  group and is
     without  recourse to the Company.  Borrowings under the Loan Agreement bear
     interest at the option of the borrower at variable  rates,  based on either
     the LIBOR rate or prime rate, has a commitment fee on the unused portion of
     the facility and contains certain financial and operational  covenants with
     respect to the technical services group. The Loan Agreement matures in 2009
     and is secured by substantially all of the tangible assets of the technical
     services group.

     On  March 1,  2002,  the  Company  purchased  $10.0  million  of its  8.75%
     subordinated  debentures  at par value,  which  satisfies  its sinking fund
     requirements on these subordinated debentures until 2008.

     On March 30, 2001, the Company's  Series A Preferred Stock was redeemed for
     cash at the stated  redemption price of $10.67 per share,  plus accrued and
     unpaid  dividends,  for a total cost of  approximately  $6.1  million.  The
     redemption  cost  includes a $0.4  million  redemption  premium,  which was
     recognized  as dividends  and  redemption  premium  applicable to preferred
     stock in the first quarter of 2001.

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

     Information   regarding  the  Company's  Critical  Accounting  Policies  is
     included in Item 7 of the Company's Annual Report on Form 10-K for the year
     ended December 31, 2001.


     Recent Accounting Pronouncements

     The  FASB  has  issued  SFAS  No.  143  "Accounting  for  Asset  Retirement
     Obligations",  which  establishes  requirements for the removal-type  costs
     associated with asset retirements.  The Company is currently  assessing the
     impact of SFAS No. 143, which must be adopted in the first quarter of 2003.

     In April of 2002, the FASB issued SFAS No. 145,  which,  among other items,
     affects the income statement  classification of gains and losses from early
     extinguishment  of debt.  Under SFAS No. 145,  which must be adopted by the
     first quarter of 2003,  early  extinguishment  of debt is now  considered a
     risk  management  strategy,  with  resulting  gains  and  losses  no longer
     classified as an extraordinary item, unless the debt  extinguishment  meets
     certain unusual in nature and infrequency of occurrence criteria,  which is
     expected to be rare. Upon adoption,  companies must reclassify  prior items
     that do not meet the new extraordinary  item  classification  criteria as a
     component of operating income. Adoption of SFAS No. 145 will have no effect
     on the net income of the Company.

     In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated
     with  Exit or  Disposal  Activities",  which  requires  all  restructurings
     initiated  after  December 31, 2002 be recorded  when they are incurred and
     can be measured  at fair value.  The  Company is  currently  assessing  the
     impact of SFAS No. 146, which must be adopted in the first quarter of 2003.




<PAGE>
XANSER CORPORATION AND SUBSIDIARIES


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


Item 3. Quantitative and Qualitative Disclosure About Market Risk

The  principal  market  risks  (i.e.,  the risk of loss arising from the adverse
changes in market rates and prices) to which the Company is exposed are interest
rates on the Company's debt and investment portfolios.  The Company's investment
portfolio  consists  of cash  equivalents;  accordingly,  the  carrying  amounts
approximate  fair  value.  The  Company's  investments  are not  material to its
financial position or performance.  Assuming variable rate debt of $17.7 million
at June 30, 2002, a one percent increase in interest rates would increase annual
net interest expense by approximately $0.2 million.


                           Part II - Other Information

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits.

          3.1  Restated  Certificate of Incorporation  of the Registrant,  dated
               September  26, 1979,  filed as Exhibit 3.1 of the exhibits to the
               Registrant's  Registration  Statement on Form S-16, which exhibit
               is hereby incorporated by reference.

          3.2  Certificate   of  Amendment  to  the  Restated   Certificate   of
               Incorporation  of the Registrant,  dated April 30, 1981, filed as
               Exhibit 3.2 of the exhibits to the Registrant's  Annual Report on
               Form 10-K ("Form  10-K") for the year ended  December  31,  1981,
               which exhibit is hereby incorporated by reference.

          3.3  Certificate   of  Amendment  to  the  Restated   Certificate   of
               Incorporation  of the  Registrant,  dated May 28, 1985,  filed as
               Exhibit 4.1 of the exhibits to the Registrant's  Quarterly Report
               on Form 10-Q ("Form  10-Q") for the quarter  ended June 30, 1985,
               which exhibit is hereby incorporated by reference.

          3.4  Certificate   of  Amendment  to  the  Restated   Certificate   of
               Incorporation of the Registrant,  dated September 17, 1985, filed
               as Exhibit 4.1 of the exhibits to the Registrant's  Form 10-Q for
               the quarter  ended  September  30, 1985,  which exhibit is hereby
               incorporated by reference.

          3.5  Certificate   of  Amendment  to  the  Restated   Certificate   of
               Incorporation  of the Registrant,  dated July 10, 1990,  filed as
               Exhibit 3.5 of the exhibits to the Registrant's Form 10-K for the
               year  ended   December   31,  1990,   which   exhibit  is  hereby
               incorporated by reference.

          3.6  Certificate   of  Amendment  to  the  Restated   Certificate   of
               Incorporation of the Registrant,  dated September 21, 1990, filed
               as Exhibit 3.5 of the exhibits to the Registrant's  Form 10-Q for
               the quarter  ended  September  30, 1990,  which exhibit is hereby
               incorporated by reference.

          3.7  Certificate   of  Amendment  to  the  Restated   Certificate   of
               Incorporation  of the Registrant,  dated August 8, 2001, filed as
               Exhibit 3.1 to the Registrant's  Current Report on Form 8-K filed
               on August  22,  2001,  which  exhibit is hereby  incorporated  by
               reference.

          3.8  By-laws of the  Registrant,  filed as exhibit 3.7 to Registrant's
               Form 10-K for the year ended December 31, 1998,  which exhibit is
               hereby incorporated by reference.

          4.1  Certificate of Designation related to the Registrant's Adjustable
               Rate Cumulative  Class A Preferred  Stock,  filed as Exhibit 4 of
               the exhibits to the Registrant's  Form 10-Q for the quarter ended
               September  30,  1983,  which  exhibit is hereby  incorporated  by
               reference.

          4.2  Certificate of Designation, Preferences and Rights related to the
               Registrant's Series B Junior Participating Preferred Stock, filed
               as  Exhibit  4.2 to the  Registrant's  10-K  for the  year  ended
               December  31,  1998,  which  exhibit  is  incorporated  herein by
               reference.

          4.3  Certificate of Designation related to the Registrant's Adjustable
               Rate Cumulative  Class A Preferred  Stock,  Series C, dated April
               23, 1991,  filed as Exhibit 4.4 of the  exhibits to  Registrant's
               Form 10-K for the year ended December 31, 1991,  which exhibit is
               hereby incorporated by reference.

          4.4  Certificate of Designation related to the Registrant's Adjustable
               Rate Cumulative Class A Preferred Stock, Series F, dated June 12,
               1997,  filed as Exhibit 4.4 of the Exhibits to Registrant's  Form
               10-K for the year  ended  December  31,  1997,  which  exhibit is
               hereby incorporated by reference.

          4.5  Indenture  between  Moran  Energy Inc.  ("Moran")  and First City
               National Bank of Houston ("First City"),  dated January 15, 1984,
               under  which  Moran  issued the 8 3/4%  Convertible  Subordinated
               Debentures due 2008, filed as Exhibit 4.1 to Moran's Registration
               Statement on Form S-3 (SEC File No.  2-81227),  which  exhibit is
               hereby incorporated by reference.

          4.6  First  Supplemental  Indenture  between the  Registrant and First
               City,  dated as of March 20,  1984,  under  which the  Registrant
               assumed  obligations  under the  Indenture  listed as Exhibit 4.5
               above, filed as Exhibit 4.7 of the Registrant's Form 10-K for the
               year  ended   December   31,  1983,   which   exhibit  is  hereby
               incorporated by reference.

          10.1 Amended and Restated Loan Agreement  between  Furmanite PLC, Bank
               of Scotland  and certain  other  Lenders,  dated May 1, 1991,  as
               amended, (the "Furmanite Loan Agreement"),  filed as Exhibit 10.8
               of the exhibits to the Registrant's  Form 10-K for the year ended
               December  31,  1994;   Exhibit  10.12  of  the  exhibits  to  the
               Registrant's  Form 10-K for the year  ended  December  31,  1996;
               Exhibit  10.12 of the  Registrant's  Form 10-K for the year ended
               December 31, 1997; and,  Exhibit 10.13 of the  Registrant's  Form
               10-K for the year ended  December  31, 1999,  which  exhibits are
               hereby incorporated by reference.

          10.2 Amendment and Restatement of the Furmanite Loan Agreement,  filed
               herewith.


     (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.



                                          XANSER CORPORATION
                                          (Registrant)


Date:  August 14, 2002                          //s//
                                         ---------------------------------------
                                         Michael R. Bakke
                                         Controller




<PAGE>


                     CERTIFICATE OF CHIEF EXECUTIVE OFFICER

          Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002

The undersigned,  being the Chief Executive  Officer of Xanser  Corporation (the
"Company") hereby certifies that the Company's Quarterly Report on Form 10-Q for
the  quarterly  period  ended  June  30,  2002,  filed  with the  United  States
Securities  and Exchange  Commission  pursuant to Section  13(a) or 15(d) of the
Securities  Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)),  fully complies with
the  requirements  of Section 13(a) or 15(d) of the  Securities  Exchange Act of
1934 and that information contained in such Quarterly Report fairly presents, in
all material respects,  the financial condition and results of operations of the
Company.

Date:    August 14, 2002.



                                               //s//
                                         ---------------------------------------
                                         John R. Barnes
                                         President and Chief Executive Officer



                     CERTIFICATE OF CHIEF FINANCIAL OFFICER

          Pursuant to Section 906(a) of the Sarbanes-Oxley Act of 2002

The undersigned,  being the Chief Financial  Officer of Xanser  Corporation (the
"Company") hereby certifies that the Company's Quarterly Report on Form 10-Q for
the  quarterly  period  ended  June  30,  2002,  filed  with the  United  States
Securities  and Exchange  Commission  pursuant to Section  13(a) or 15(d) of the
Securities  Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)),  fully complies with
the  requirements  of Section 13(a) or 15(d) of the  Securities  Exchange Act of
1934 and that information contained in such Quarterly Report fairly presents, in
all material respects,  the financial condition and results of operations of the
Company.

Date:    August 14, 2002.



                                              //s//
                                         ---------------------------------------
                                         Howard C. Wadsworth
                                         Vice President, Treasurer and Secretary
                                         (Chief Financial Officer)