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

                       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, 2005

                                       OR

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

                        Commission File Number 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 by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

             Yes                                  No      X
                 ----------                          ------------

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 August 5, 2005
---------------------                              -----------------------------
     No par value                                        34,112,203 shares

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

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES


FORM 10-Q
QUARTER ENDED JUNE 30, 2005
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                          Page No.
                           Part I. Financial Information

<S>               <C>                                                                                      <C>
Item 1.           Financial Statements (Unaudited)

                  Condensed Consolidated Statements of Income - Three and
                    Six Months Ended June 30, 2005 and 2004                                                    1

                  Condensed Consolidated Balance Sheets - June 30, 2005
                    and December 31, 2004                                                                      2

                  Condensed Consolidated Statements of Cash Flows - Six
                    Months Ended June 30, 2005 and 2004                                                        3

                  Notes to Condensed Consolidated Financial Statements                                         4

Item 2.           Management's Discussion and Analysis of
                     Financial Condition and Results of Operations                                            11

Item 3.           Quantitative and Qualitative Disclosure About Market Risk                                   20

Item 4.           Controls and Procedures                                                                     20


                           Part II. Other Information

Item 4.           Submission of Matters to a Vote of Security Holders                                         21

Item 6.           Exhibits                                                                                    21

</TABLE>


<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

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

                                                          Three Months Ended                  Six Months Ended
                                                               June 30,                         June 30,
                                                     -----------------------------    -----------------------------
                                                          2005           2004              2005           2004
                                                     -------------   -------------    -------------  --------------
<S>                                                  <C>             <C>              <C>            <C>
Revenues:
     Services                                        $      38,842   $      34,315    $      73,233  $       66,156
     Products                                                4,627           1,341            5,407           1,664
                                                     -------------   -------------    -------------  --------------
         Total revenues                                     43,469          35,656           78,640          67,820
                                                     -------------   -------------    -------------  --------------
Costs and expenses:
     Operating costs                                        37,221          31,612           72,015          61,574
     Cost of products sold                                   5,271             744            5,843             925
     Depreciation and amortization                             851             891            1,829           1,770
     General and administrative                                646             792            1,437           1,544
                                                     -------------   -------------    -------------  --------------
         Total costs and expenses                           43,989          34,039           81,124          65,813
                                                     -------------   -------------    -------------  --------------
Operating income (loss)                                       (520)          1,617           (2,484)          2,007

Interest income                                                178              31              274              65
Interest expense                                              (254)           (238)            (536)           (477)
                                                     -------------   -------------    -------------  --------------
Income (loss) before income taxes                             (596)          1,410           (2,746)          1,595
Income tax (expense)                                        (1,107)           (541)          (1,262)           (616)
                                                     -------------   -------------    -------------  --------------
Net income (loss)                                    $      (1,703)  $         869    $      (4,008) $          979
                                                     =============   =============    =============  ==============
Earnings (loss) per common share - Basic
   and diluted                                       $       (.05)   $         .03    $        (.12) $          .03
                                                     ============    =============    =============  ==============

</TABLE>

            See notes to condensed consolidated financial statements.
                                        1

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                              June 30,              December 31,
                                                                                2005                    2004
                                                                          ---------------        ------------------
                                                                             (Unaudited)
            ASSETS
<S>                                                                        <C>                     <C>
Current assets:
    Cash and cash equivalents                                              $       13,218          $      21,598
    Accounts receivable, trade                                                     42,130                 35,470
    Receivable from businesses distributed to common
        stockholders                                                                6,481                  6,699
    Inventories                                                                    11,572                  9,131
    Prepaid expenses and other                                                      3,666                  5,283
                                                                           --------------          -------------
        Total current assets                                                       77,067                 78,181
                                                                           --------------          -------------
Property and equipment                                                             42,877                 46,571
Less accumulated depreciation and amortization                                     29,111                 32,933
                                                                           --------------          -------------
    Net property and equipment                                                     13,766                 13,638
                                                                           --------------          -------------
Excess of cost over fair value of net assets of
    acquired businesses                                                            13,802                 13,802
Deferred income taxes and other assets                                              5,618                  6,299
                                                                           --------------          -------------
                                                                           $      110,253          $     111,920
                                                                           ==============          =============

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term debt                                      $          470          $         524
    Accounts payable                                                                8,934                  5,416
    Accrued expenses                                                               24,174                 23,416
    Accrued income taxes                                                            7,603                  7,609
                                                                           --------------          -------------
        Total current liabilities                                                  41,181                 36,965
                                                                           --------------          -------------
Long-term debt, less current portion:

    Technical services                                                             12,178                 12,250
    Information technology services                                                   248                    248
    Parent company                                                                  5,000                  5,000
                                                                           --------------          -------------
        Total long-term debt, less current portion                                 17,426                 17,498
                                                                           --------------          -------------
Other liabilities                                                                   1,101                  1,567

Commitments and contingencies

Stockholders' equity:
    Common stock, without par value                                                 4,341                  4,335
    Additional paid-in capital                                                    127,053                126,550
    Treasury stock, at cost                                                       (25,877)               (26,180)
    Retained earnings (accumulated deficit)                                       (50,307)               (46,299)
    Accumulated other comprehensive income (loss)                                  (4,665)                (2,516)
                                                                           --------------          -------------
        Total stockholders' equity                                                 50,545                 55,890
                                                                           --------------          -------------
                                                                           $      110,253          $     111,920
                                                                           ==============          =============

</TABLE>

            See notes to condensed consolidated financial statements.
                                        2

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                            Six Months Ended
                                                                                                 June 30,
                                                                                  ---------------------------------
                                                                                        2005              2004
                                                                                  -------------      --------------
<S>                                                                               <C>                <C>
Operating activities:
   Net income (loss)                                                              $      (4,008)     $          979
   Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
        Depreciation and amortization                                                     1,829               1,770
       Deferred income taxes                                                                375                (981)
       Other                                                                                149                 118
       Changes in working capital components                                             (3,156)             (1,456)
                                                                                  -------------      --------------
         Net cash provided by (used in) operating activities                             (4,811)                430
                                                                                  -------------      --------------
Investing activities:
   Capital expenditures                                                                  (2,678)             (2,099)
   Other                                                                                   (839)                178
                                                                                  -------------      --------------
       Net cash used in investing activities                                             (3,517)             (1,921)
                                                                                  -------------      --------------
Financing activities:
   Issuance of debt                                                                         346               1,225
   Payments on debt                                                                        (472)             (1,390)
   Common stock issued and other                                                            139                  58
   Increase (decrease) in receivable from businesses
     distributed to common stockholders                                                     218                 (42)
                                                                                  -------------      --------------
       Net cash provided by (used in) financing activities                                  231                (149)
                                                                                  -------------      --------------

Effect of exchange rate changes on cash                                                    (283)               (114)
                                                                                  -------------      --------------
Decrease in cash and cash equivalents                                                    (8,380)             (1,754)
                                                                                  -------------      --------------
Cash and cash equivalents at beginning of period                                         21,598              21,240
                                                                                  -------------      --------------
Cash and cash equivalents at end of period                                        $      13,218      $       19,486
                                                                                  =============      ==============
Supplemental cash flow information:
   Cash paid for interest                                                         $         512      $          458
                                                                                  =============      ==============
   Cash paid for income taxes                                                     $       1,126      $        1,630
                                                                                  =============      ==============

</TABLE>


            See notes to condensed consolidated financial statements.
                                        3

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

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


1.   GENERAL AND SIGNIFICANT ACCOUNTING POLICIES

     The condensed  consolidated  financial  statements  include the accounts of
     Xanser Corporation  ("Parent Company") and its subsidiaries  (collectively,
     the "Company").  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,  2005 and  2004  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, 2004. In the opinion of
     the Company's management, the accompanying condensed consolidated financial
     statements  contain all of the adjustments,  consisting of normal recurring
     accruals,  necessary to present fairly the consolidated  financial position
     of the Company at June 30, 2005, and the consolidated results of income and
     cash flows for the periods ended June 30, 2005 and 2004.  Operating results
     for the  three  and six  months  ended  June 30,  2005 are not  necessarily
     indicative of the results that may be expected for the year ending December
     31, 2005.

     On November 27, 2000, the Board of Directors of the Company  authorized the
     distribution of its pipeline,  terminaling and product marketing businesses
     (the  "Distribution")  to its  stockholders  in the  form of a new  limited
     liability  company,  Kaneb  Services  LLC ("KSL").  On June 29,  2001,  the
     Distribution was completed,  with each shareholder of the Company receiving
     one common share of KSL for each three shares of the Company's common stock
     held on June 20, 2001, the record date for the  Distribution,  resulting in
     the  distribution  of 10.85  million  KSL common  shares.  Pursuant  to the
     Distribution,  the Company  entered  into an agreement  (the  "Distribution
     Agreement") with KSL, whereby,  KSL is obligated to pay the Company amounts
     equal to certain  expenses and tax  liabilities  incurred by the Company in
     connection with the Distribution.  The Distribution Agreement also requires
     KSL to pay the  Company  an  amount  calculated  based  on any  income  tax
     liability of the Company that, in the sole judgment of the Company,  (i) is
     attributable  to  increases  in income tax from past years  arising  out of
     adjustments  required by federal and state tax  authorities,  to the extent
     that such increases are properly  allocable to the  businesses  that became
     part of KSL, or (ii) is  attributable  to the  distribution of KSL's common
     shares and the  operations of KSL's  businesses  prior to the  Distribution
     date. In the event of an examination of the Company by federal or state tax
     authorities, the Company will have unfettered control over the examination,
     administrative  appeal,  settlement  or  litigation  that may be  involved,
     notwithstanding  that KSL has agreed to pay any additional tax. At June 30,
     2005, $6.5 million was recorded as receivable  from businesses  distributed
     to common  stockholders  pursuant  to the  provisions  of the  Distribution
     Agreement.  On July 1, 2005,  KSL was purchased by Valero L.P.,  and Valero
     L.P.  affirmatively  assumed the obligations of KSL under the  Distribution
     Agreement.

     In December of 2004,  the Financial  Accounting  Standards  Board  ("FASB")
     issued Statement of Financial  Accounting Standards No. 123 (revised 2004),
     "Share-Based Payment" ("SFAS No. 123R"), which addresses the accounting for
     share-based  payment  transactions in which an enterprise receives employee
     services  in  exchange  for  equity  instruments  of  the  enterprise,   or
     liabilities  that are based on the fair  value of the  enterprise's  equity
     instruments  or  that  may  be  settled  by the  issuance  of  such  equity
     instruments.   SFAS  No.  123R   eliminates  the  ability  to  account  for
     share-based  compensation  transactions  using the  intrinsic  value method
     under Accounting  Principles Board Opinion 25, "Accounting for Stock Issued
     to  Employees"  ("APB  Opinion  25"),  and  generally  requires  that  such
     transactions be accounted for using a fair-value-based  method. The Company
     is currently  evaluating the provisions of SFAS No. 123R to determine which
     fair-value-based  model and transitional provision to follow upon adoption.
     The alternatives for transition include either the modified  prospective or
     the  modified   retrospective  methods.  The  modified  prospective  method
     requires  that  compensation  expense be recorded  for all  unvested  stock
     options and restricted stock as the requisite service is rendered beginning
     with the first  quarter of  adoption.  The  modified  retrospective  method
     requires  recording  compensation  expense for stock options and restricted
     stock  beginning  with  the  first  period  restated.  Under  the  modified
     retrospective  method,  prior  periods  may be  restated  either  as of the
     beginning  of the year of adoption or for all periods  presented.  SFAS No.
     123R will be effective  for the Company  beginning in the first  quarter of
     2006.  The  impact of  adoption  on the  Company's  consolidated  financial
     statements is still being evaluated.

     In  accordance  with  the  provisions  of SFAS  No.  123,  "Accounting  for
     Stock-Based  Compensation",  the Company applies APB Opinion 25 and related
     interpretations in accounting for its stock option plans and,  accordingly,
     does not recognize compensation cost based on the fair value of the options
     granted at grant date as  prescribed  by SFAS No.  123.  The  Company  also
     applies the  disclosure  provisions of SFAS No. 123, as amended by SFAS No.
     148, "Accounting for Stock-based  Compensation - Transition and Disclosure"
     as  if  the   fair-value-based   method  had  been   applied  in  measuring
     compensation  expense. The Black-Scholes option pricing model has been used
     to estimate the value of stock options issued.

     Effective  June 3, 2005, the Company vested all  outstanding  options.  The
     impact of early vesting of the options on net income was not significant.

     The  following  illustrates  the effect on net income  (loss) and basic and
     diluted  earnings  (loss) per share if the fair value based method had been
     applied:

<TABLE>
<CAPTION>
                                                          Three Months Ended                Six Months Ended
                                                                  June 30,                      June 30,
                                                     -----------------------------    -----------------------------
                                                          2005            2004             2005           2004
                                                     -------------   -------------    -------------  --------------
                                                                (in thousands - except per share amounts)

<S>                                                  <C>             <C>              <C>            <C>
     Reported net income (loss)                      $      (1,703)  $         869    $      (4,008) $          979

     Stock-based employee compensation
         expense determined under the fair
         value based method, net of income
         taxes                                                (426)            (21)            (460)            (36)
                                                     -------------   -------------    -------------  --------------
     Pro forma net income (loss)                     $      (2,129)  $         848    $      (4,468) $          943
                                                     =============   =============    =============  ==============
     Earnings (loss) per share:
        As reported - basic and diluted              $       (.05)   $         .03    $        (.12) $          .03
                                                     ============    =============    =============  ==============
        Pro forma - basic and diluted                $       (.06)   $         .03    $        (.13) $          .03
                                                     ============    =============    =============  ==============

</TABLE>

2.   COMPREHENSIVE INCOME (LOSS)

     Comprehensive  income  (loss) for the three and six  months  ended June 30,
     2005 and 2004 is as follows:

<TABLE>
<CAPTION>

                                                          Three Months Ended                Six Months Ended
                                                                  June 30,                      June 30,
                                                     -----------------------------    -----------------------------
                                                          2005            2004             2005           2004
                                                     -------------   -------------    -------------  --------------
                                                                             (in thousands)

<S>                                                  <C>             <C>              <C>            <C>
     Net income (loss)                               $      (1,703)  $         869    $      (4,008) $          979
     Foreign currency translation
        adjustment                                          (1,444)           (157)          (2,149)           (495)
                                                     -------------   -------------    -------------  --------------

     Comprehensive income (loss)                     $      (3,147)  $         712    $      (6,157) $          484
                                                     =============   =============    =============  ==============

</TABLE>

     At June 30, 2005 and  December 31, 2004,  accumulated  other  comprehensive
     loss  consisted  of  cumulative  losses from foreign  currency  translation
     adjustments  of  $(0.8)  million  and  $(2.9)  million,  respectively,  and
     cumulative   losses  from  minimum   pension   liability   adjustments  for
     subsidiaries of $5.4 million and $5.4 million, respectively.


3.   EARNINGS (LOSS) PER SHARE

     The following is a reconciliation  of basic and diluted earnings (loss) per
     share (in thousands, except for per share amounts):

<TABLE>
<CAPTION>

                                                                                    Weighted
                                                                                     Average
                                                                                     Common            Per-Share
                                                             Net Income (Loss)       Shares             Amount
                                                           ------------------      -------------   ----------------
<S>                                                        <C>                     <C>             <C>
     Three Months Ended June 30, 2005
     --------------------------------
         Basic earnings (loss) per share -
           Net income (loss)                                 $        (1,703)             32,430   $         (0.05)
                                                                                                   ===============
         Effect of dilutive securities                                  -                   -
                                                             ---------------     ---------------
         Diluted earnings (loss) per share -
           Net income (loss)                                 $        (1,703)             32,430   $         (0.05)
                                                             ===============     ===============   ===============
     Three Months Ended June 30, 2004
     --------------------------------
         Basic earnings per share -
           Net income                                        $           869              32,035   $            .03
                                                                                                   ================
         Effect of dilutive securities                                  -                  1,096
                                                             ---------------     ---------------
         Diluted earnings per share -
           Net income                                        $           869              33,131   $            .03
                                                             ===============     ===============   ================
     Six Months Ended June 30, 2005
     ------------------------------
         Basic earnings (loss) per share -
           Net income (loss)                                 $        (4,008)             32,394   $         (0.12)
                                                                                                   ===============
         Effect of dilutive securities                                  -                   -
                                                             ---------------     ---------------
         Diluted earnings (loss) per share -
           Net income (loss)                                 $        (4,008)             32,394   $         (0.12)
                                                             ===============     ===============   ===============
     Six Months Ended June 30, 2004
     ------------------------------
         Basic earnings per share -
           Net income                                        $           979              32,026   $            .03
                                                                                                   ================
         Effect of dilutive securities                                  -                  1,076
                                                             ---------------     ---------------
         Diluted earnings per share -
           Net income                                        $           979              33,102   $            .03
                                                             ===============     ===============   ================

</TABLE>

     As a result of the net loss for the three  months and six months ended June
     30, 2005,  3,106,000 and 3,173,000  stock options at a weighted net average
     price of $1.89 and $1.88, respectively,  were excluded from the computation
     of diluted  earnings per share  because the effect would be  anti-dilutive.
     Options to purchase 160,000 and 29,000 shares of common stock at a weighted
     average price of $2.76 and $3.05,  respectively,  were  outstanding for the
     three and six month periods  ended June 30, 2005,  but were not included in
     the computation of diluted earnings per share because the options' exercise
     prices were greater  than the average  market  prices of the common  stock.
     Options to purchase  76,000  shares of common  stock at a weighted  average
     price of $2.68 were  outstanding  for the three and six month periods ended
     June 30, 2004, but were not included in the computation of diluted earnings
     per share  because  the  options'  exercise  prices were  greater  than the
     average market prices of the common stock. The Company's 8.75%  convertible
     subordinated  debentures  were  excluded  from the  computation  of diluted
     earnings per share for the three and six month  periods ended June 30, 2005
     and 2004, because the effects of assumed conversion would be anti-dilutive.


4.   RETIREMENT PLAN

     One of the Company's  foreign  subsidiaries  has a defined  benefit pension
     plan covering  substantially all of its United Kingdom employees (the "U.K.
     Plan").  Net  pension  cost  for  the  U.K.  Plan  included  the  following
     components:

<TABLE>
<CAPTION>

                                                          Three Months Ended                Six Months Ended
                                                                  June 30,                      June 30,
                                                     -----------------------------    -----------------------------
                                                          2005            2004             2005           2004
                                                     -------------   -------------    -------------  --------------
                                                                             (in thousands)
<S>                                                  <C>             <C>              <C>            <C>
       Net periodic pension cost:
           Service cost                              $         122   $         116    $         248  $          232
           Interest cost                                       908             861            1,850           1,722
           Expected return on plan assets                     (983)           (892)          (2,003)         (1,784)
           Amortization of prior service cost                  (28)            (27)             (57)            (55)
           Recognized net gain                                 134             183              274             366
                                                     -------------   -------------    -------------  --------------
       Net periodic pension cost                     $         153   $         241    $         312  $          481
                                                     =============   =============    =============  ==============

</TABLE>


5.   CONTINGENCIES

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


6.   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 to healthcare and other institutions.

     The Company measures segment profit as operating income.  Segment operating
     results are reported on the basis that is used  internally  for  evaluating
     segment  performance  and deciding  how to allocate  resources to segments.
     General  corporate  includes  compensation  and benefits  paid to corporate
     officers and employees,  certain insurance, legal, tax, financial reporting
     and other  administrative  costs,  including  costs of maintaining a public
     company, which are not related to specific business segments.

     Segment assets are those assets,  including  excess of cost over fair value
     of net  assets  of  acquired  businesses,  controlled  by  each  reportable
     segment. General corporate assets include corporate cash balances, deferred
     taxes and other assets not related to specific  segments.  Business segment
     data is as follows:

<TABLE>
<CAPTION>

                                                         Three Months Ended                Six Months Ended
                                                              June 30,                         June 30,
                                                     -----------------------------    -----------------------------
                                                          2005           2004              2005           2004
                                                     -------------   -------------    -------------  --------------
                                                                             (in thousands)
<S>                                                  <C>             <C>              <C>            <C>
     Business segment revenues:
        Technical services                           $      34,849   $      29,758    $      65,508  $       56,740
        Information technology services                      8,620           5,898           13,132          11,080
                                                     -------------   -------------    -------------  --------------
                                                     $      43,469   $      35,656    $      78,640  $       67,820
                                                     =============   =============    =============  ==============
     Technical services segment revenues:
        Underpressure services                       $      12,333   $      11,266    $      25,275  $       22,751
        Turnaround services                                 16,677          15,474           29,298          28,348
        Other services                                       5,839           3,018           10,935           5,641
                                                     -------------   -------------    -------------  --------------
                                                     $      34,849   $      29,758    $      65,508  $       56,740
                                                     =============   =============    =============  ==============
     Business segment profit (loss):
        Technical services                           $       2,913   $       2,115    $       4,444  $        3,255
        Information technology services                     (2,788)            294           (5,492)            296
        General corporate                                     (645)           (792)          (1,436)         (1,544)
                                                     -------------   -------------    -------------  --------------
           Operating income (loss)                            (520)          1,617           (2,484)          2,007
        Interest income                                        178              31              274              65
        Interest expense                                      (254)           (238)            (536)           (477)
                                                     -------------   -------------    -------------  --------------
        Income (loss) before income taxes            $        (596)  $       1,410    $      (2,746) $        1,595
                                                     =============   =============    =============  ==============

</TABLE>

<TABLE>
<CAPTION>

                                                                                         June 30,      December 31,
                                                                                           2005           2004
                                                                                      ------------- -----------------
                                                                                             (in thousands)
<S>                                                                                   <C>            <C>
     Total assets:
        Technical services                                                            $      69,356  $       69,962
        Information technology services                                                      22,131          16,720
        General corporate                                                                    18,866          25,238
                                                                                      -------------  --------------
                                                                                      $     110,353  $      111,920
                                                                                      =============  ==============

</TABLE>


<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

Item 2.  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.

     Overview

     The Company  conducts its principal  businesses  in two industry  segments:
     technical services and information technology services.

     The Company's  technical services business,  which is conducted through its
     Furmanite group of subsidiaries,  offers specialized  technical services to
     an international  base of clients located in the United States,  Europe and
     Asia-Pacific  regions.  The technical  services  business  provides on-line
     repairs of leaks in valves,  pipes and other  components of piping  systems
     and related  equipment,  typically in the  flow-process  industries.  Other
     services provided include on-site machining,  bolting and valve testing and
     repair on such systems and equipment.  In addition,  the division  provides
     hot  tapping,  fugitive  emissions  monitoring,  passive  fire  protection,
     concrete repair and heat exchanger repair.

     The Company's  information  technology services business,  Xtria,  provides
     services  and  related  products  to the  healthcare  industry  and various
     governmental  agencies.  The  segment's  primary  business  is  information
     technology services,  including application software,  hardware, web hosted
     data processing, networking, consulting and support services.

     Consolidated Results of Operations

<TABLE>
<CAPTION>
                                                       Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                 -------------------------------    -------------------------------
                                                     2005              2004             2005              2004
                                                 -------------    --------------    -------------   ---------------
                                                             (in thousands - except per share amounts)
<S>                                              <C>              <C>               <C>             <C>
     Revenues                                    $      43,469    $       35,656    $      78,640   $        67,820
                                                 =============    ==============    =============   ===============

     Operating income (loss)                     $        (520)   $        1,617    $      (2,484)  $         2,007
                                                 =============    ==============    =============   ===============

     Net income (loss)                           $      (1,703)   $          869    $      (4,008)  $           979
                                                 =============    ==============    =============   ===============

     Earnings (loss) per common share
        - basic and diluted                      $        (.05)   $         .03     $        (.12)  $          .03
                                                 =============    =============     =============   ==============

     Capital expenditures                        $       1,351    $        1,122    $       2,678   $         2,099
                                                 =============    ==============    =============   ===============

</TABLE>


     For the three months ended June 30, 2005,  consolidated  revenues increased
     by $7.8 million,  or 22%,  when compared to the same 2004 period,  due to a
     $5.1 million increase in revenues from the technical services business (see
     "Technical  Services" below),  and a $2.7 million increase in revenues from
     the information  technology services business (see "Information  Technology
     Services" below).  Consolidated operating income for the three months ended
     June 30,  2005  decreased  by $2.1  million,  when  compared  to the second
     quarter of 2004,  due to a $3.1 million  decrease in operating  income from
     the information  technology  services business,  partially offset by a $0.8
     million increase in operating income from the technical  services business.
     Second quarter 2005 net income  decreased by $2.6 million,  compared to the
     same 2004 period,  primarily  due to the decrease in operating  income from
     the information technology services business.

     For the six months ended June 30, 2005,  consolidated revenues increased by
     $10.8  million,  or 16%, when  compared to the same 2004 period,  due to an
     $8.8 million increase in revenues from the technical services business (see
     "Technical  Services"  below) and a $2.0 million  increase in revenues from
     the information  technology services business (see "Information  Technology
     Services"  below).  Consolidated  operating income for the six months ended
     June 30, 2005  decreased  by $4.5  million  when  compared to the same 2004
     period,  primarily due to a $5.8 million  decrease in operating income from
     the information  technology  services business,  partially offset by a $1.2
     million increase in technical services operating income. Net income for the
     six months ended June 30, 2005  decreased by $5.0 million when  compared to
     the same 2004 period, as the operating loss from the information technology
     services  and  higher  foreign  income  tax  expense  more than  offset the
     increase in operating income from the technical services business.

     Technical Services

<TABLE>
<CAPTION>
                                                      Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                   ---------------------------      ------------------------------
                                                      2005             2004             2005            2004
                                                   -----------     -----------      -------------   --------------
                                                                          (in thousands)

<S>                                                <C>             <C>              <C>             <C>
     Revenues:
         United States                             $     7,215     $     6,945      $      14,323   $       14,152
         Europe                                         21,550          18,301             39,905           34,191
         Asia-Pacific                                    6,084           4,512             11,280            8,397
                                                   -----------     -----------      -------------   --------------
              Total Revenues                       $    34,849     $    29,758      $      65,508   $       56,740
                                                   ===========     ===========      =============   ==============

     Operating income:
         United States                             $        55     $      (121)     $          (8)  $          (14)
         Europe                                          2,651           2,071              4,285            3,098
         Asia-Pacific                                    1,080             689              1,820            1,213
         Headquarters                                     (873)           (524)            (1,653)          (1,042)
                                                   -----------     -----------      -------------   --------------
              Total operating income               $     2,913     $     2,115      $       4,444   $        3,255
                                                   ===========     ===========      =============   ==============
     Capital expenditures                          $       730     $       690      $       1,511   $        1,537
                                                   ===========     ===========      =============   ==============

</TABLE>

     For the three  months  ended  June 30,  2005,  revenues  for the  technical
     services business  increased by $5.1 million,  or 17%, when compared to the
     same 2004 period. In the United States, revenues increased by $0.3 million,
     or 4%, when  compared to the second  quarter of 2004,  due to  increases in
     underpressure and other process plant services, offset by a slight decrease
     in turnaround services.  In Europe,  revenues increased by $3.2 million, or
     18%, when compared to the second quarter of 2004, due to solid increases in
     underpressure and other process plant services.  In Asia-Pacific,  revenues
     increased by $1.6 million,  or 35% when  compared to the second  quarter of
     2004,  primarily  due to increases in  turnaround  services.  The impact of
     foreign  currency  exchange  rate  increases was $0.6 million in Europe and
     $0.3  million  in  Asia-Pacific  when  compared  to 2004  foreign  currency
     exchange rates.

     For the three  months  ended June 30, 2005,  technical  services  operating
     income  increased by $0.8  million,  or 38%, when compared to the same 2004
     period.  In the United States,  operating income increased by $0.2 million,
     when compared to the same period in 2004, due primarily to higher  revenues
     and  operating  margins.  In Europe,  operating  income  increased  by $0.6
     million,  or 28%,  when  compared to the same 2004  period,  due to overall
     higher revenues and higher operating  margins.  In Asia-Pacific,  operating
     income  increased by $0.4  million,  or 57%, when compared to the same 2004
     period, due to higher revenues and operating margins. The impact of foreign
     currency  exchange rates on second  quarter 2005  operating  income was not
     significant.

     For the six months ended June 30, 2005, revenues for the technical services
     business increased by $8.8 million,  or 15%, when compared to the same 2004
     period.  In the United  States,  revenues  increased by $0.2 million,  when
     compared to the first six months of 2004, as increases in underpressure and
     other  process  plant  services  were  partially  offset  by  decreases  in
     turnaround services. In Europe, revenues increased by $5.7 million, or 17%,
     when  compared to the first six months of 2004,  due to solid  increases in
     underpressure and other process plant services.  In Asia-Pacific,  revenues
     increased by $2.9 million, or 34%, when compared to the first six months of
     2004,  primarily  due to increases in  turnaround  and other  process plant
     services.  The impact of foreign currency  exchange rate increases was $1.5
     million in Europe and $0.4 million in  Asia-Pacific  when  compared to 2004
     foreign currency exchange rates.

     For the six months ended June 30, 2005, technical services operating income
     increased by $1.2  million,  or 37%, when compared to the same 2004 period.
     In the United States, operating income was about the same, when compared to
     the same period in 2004.  In Europe,  operating  income  increased  by $1.2
     million,  or 38%,  when  compared to the same 2004  period,  due to overall
     higher revenues and higher operating  margins.  In Asia-Pacific,  operating
     income  increased by $0.6  million,  or 50%, when compared to the same 2004
     period,  due also to higher revenues and operating  margins.  The technical
     services  headquarters costs increased by $0.6 million when compared to the
     same 2004  period.  The impact of foreign  currency  exchange  rates on the
     first and second quarter 2005 operating income was not significant.


<PAGE>


     Information Technology Services

<TABLE>
<CAPTION>

                                                     Three Months Ended                  Six Months Ended
                                                            June 30,                           June 30,
                                                   ---------------------------      ------------------------------
                                                      2005             2004             2005            2004
                                                   -----------     -----------      -------------   --------------
                                                                          (in thousands)


<S>                                                <C>             <C>              <C>              <C>
     Revenues                                      $     8,620     $     5,898      $      13,132    $      11,080
                                                   ===========     ===========      =============    =============

     Operating income (loss)                       $    (2,788)    $       294      $      (5,492)   $         296
                                                   ===========     ===========      =============    =============

     Capital expenditures                          $       621     $       432      $       1,167   $          562
                                                   ===========     ===========      =============   ==============

</TABLE>

     For the  three and six  month  periods  ended  June 30,  2005,  information
     technology  services revenues  increased by $2.7 million,  or 46%, and $2.1
     million,  or 19%,  respectively,  when compared to the three and six months
     ended June 30, 2004,  primarily  due to increases  in  healthcare  services
     equipment  revenues,  partially  offset  by  decreases  in  other  services
     revenues.

     For the  three and six  month  periods  ended  June 30,  2005,  information
     technology  services  operating  income  decreased by $3.1 million and $5.8
     million, respectively, when compared to the three and six months ended June
     30, 2004,  primarily due to substantially  higher operating and general and
     administrative  cost  levels  that  resulted  from a focus on lower  margin
     equipment  sales with  little  services  work.  Revenue  efforts  have been
     refocused on higher margin service offerings.

     Income Taxes

     The  Company  maintains a  valuation  allowance  to adjust the basis of net
     deferred  tax assets in  accordance  with the  provisions  of  Statement of
     Financial  Accounting Standards No. 109 "Accounting for Income Taxes". As a
     result,  all domestic federal and state income taxes recorded for the three
     and six month  periods  ended June 30, 2005 and 2004 are fully  offset by a
     corresponding change in valuation allowance.

     Income tax expense  differs from the  expected  tax at statutory  rates due
     primarily to the change in valuation  allowance for deferred tax assets and
     different tax rates in the various foreign jurisdictions.

     Liquidity and Capital Resources

     Cash provided by (used in) operating activities was $(4.8) million and $0.4
     million  for  the  six  month   periods  ended  June  30,  2005  and  2004,
     respectively. The 2005 decrease, when compared to the same 2004 period, was
     due primarily to the decreases in information  technology  operating income
     and overall  higher  working  capital  requirements.  During the six months
     ended  June 30,  2005,  the  Company's  working  capital  requirements  for
     operations  and  capital  expenditures  were  funded  through  the  use  of
     internally generated funds and existing cash balances.

     Capital  expenditures  were $2.7 million and $2.1 million for the six month
     periods ended June 30, 2005 and 2004,  respectively.  Consolidated  capital
     expenditures  for the year 2005  have been  budgeted  at $3  million  to $5
     million,  depending  on the  economic  environment  and  the  needs  of the
     business. Future capital expenditures, however, will depend on many factors
     beyond  the  Company's  control,  including  demand  for  services  in  the
     technical  services and information  technology  services  businesses,  and
     local, state and federal government regulations.  No assurance can be given
     that required  capital  expenditures  will not exceed  anticipated  amounts
     during 2005 or thereafter.  Capital expenditures  (excluding  acquisitions)
     during  the  year  are  expected  to  be  funded  from  existing  cash  and
     anticipated cash flows from operations.

     At June 30, 2005,  $11.5 million was  outstanding  under a $25 million bank
     loan agreement  that provides  working  capital for the technical  services
     segment and is without recourse to the Parent Company. Borrowings under the
     loan  agreement  bear  interest  at the option of the  borrower at variable
     rates  (3.95% at June 30,  2005),  based on either  the LIBOR rate or prime
     rate and have a commitment fee on the unused  portion of the facility.  The
     loan agreement also contains  certain  financial and operational  covenants
     with respect to the  technical  services  group,  including  percentage  of
     tangible assets and revenues related to certain  geographical areas, ratios
     of debt to cash flow,  as defined in the loan  agreement,  and cash flow to
     fixed charges and capital  expenditures.  At June 30, 2005, the Company was
     in compliance  with all covenants.  The loan  agreement  matures in January
     2009 and is  secured by  substantially  all of the  tangible  assets of the
     technical services group.

     The  Parent   Company's  8.75%   subordinated   debentures   ($5.0  million
     outstanding at June 30, 2005) are convertible  into shares of the Company's
     common stock at the conversion price of $5.26 per share.

<PAGE>

     The following  schedule sets forth, by period, the Company's debt repayment
     obligations  and  material  contractual  commitments  at December 31, 2004.
     There were no material changes to the Company's  schedule of debt repayment
     obligations and material contractual  commitments from December 31, 2004 to
     June 30, 2005.

<TABLE>
<CAPTION>
                                                          Less than                                        After
                                              Total        1 year        1-3 years       4-5 years        5 years
                                           ----------     ---------      ----------     ----------      -----------
                                                                      (in thousands)
<S>                                        <C>            <C>            <C>            <C>             <C>
     Debt:
        Technical services credit
           facility                        $   11,532     $     -        $      -       $   11,532      $     -
        Parent company convertible
           subordinated debentures              5,000           -               -            5,000            -
                                           ----------     ---------      ----------     ----------      ----------
                                               16,532           -               -           16,532            -
        Capital leases                          1,490           524             822            142               2
                                           ----------     ---------      ----------     ----------      ----------
           Debt subtotal                       18,022           524             822         16,674               2
                                           ----------     ---------      ----------     ----------      ----------
        Interest on debt                        3,521           982           1,857            682            -
                                           ----------     ---------      ----------     ----------      ----------
           Debt and interest total             21,543         1,506           2,679         17,356               2
                                           ----------     ---------      ----------     ----------      ----------
     Other contractual commitments:
        Pension plan contributions              9,400           940           1,880          1,880           4,700
        Operating leases                       14,490         4,289           6,255          2,231           1,715
                                           ----------     ---------      ----------     ----------      ----------
           Total                           $   45,433     $   6,735      $   10,814     $   21,467      $    6,417
                                           ==========     =========      ==========     ==========      ==========

</TABLE>

     Interest  on  debt is  calculated  based  on  outstanding  balances,  using
     interest  rates in effect at December 31, 2004.  Estimated  annual  pension
     plan  contributions  are assumed to be  consistent  with  current  expected
     contribution levels.

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

     Off-Balance Sheet Transactions

     The Company was not a party to any off-balance  sheet  transactions at June
     30, 2005,  or for the three and six month  periods  ended June 30, 2005 and
     2004.

     Critical Accounting Policies and Estimates

     The  preparation of the Company's  financial  statements in conformity with
     accounting  principles  generally  accepted in the United States of America
     requires  management  to make  estimates  and  assumptions  that affect the
     reported  amounts of assets and  liabilities  and disclosures of contingent
     assets and  liabilities  at the date of the  financial  statements  and the
     reported  amounts of revenues and  expenses  during the  reporting  period.
     Actual results could differ from those estimates.  Significant policies are
     presented  in the Notes to the  Consolidated  Financial  Statements  in the
     Company's Annual Report on Form 10-K for the year ended December 31, 2004.

     Critical  accounting  policies  are those  that are most  important  to the
     portrayal  of our  financial  position  and  results of  operations.  These
     policies  require  management's  most  difficult,   subjective  or  complex
     judgments, often employing the use of estimates about the effect of matters
     that are  inherently  uncertain.  Our  most  critical  accounting  policies
     pertain  to revenue  recognition,  allowance  for  doubtful  accounts,  the
     impairment  of excess of cost over  fair  value of net  assets of  acquired
     businesses  and income taxes.  Critical  accounting  policies are discussed
     regularly (at least quarterly) with the Company's Audit Committee.

     The technical  services  segment's revenues are based primarily on time and
     materials and are generally  short term in nature.  Revenues are recognized
     when services to customers  have been rendered or when products are shipped
     and risk of ownership is passed to the  customer.  The  technical  services
     business  provides  limited  warranties  to customers,  depending  upon the
     service performed.  Warranty claim costs were not material during the three
     and six month periods ended June 30, 2005 and 2004.

     The Company's  information  technology  services  segment  includes revenue
     recognized under multiple element  arrangements  with its customers,  which
     requires the use of significant judgments and estimates by management.  The
     accounting policies for revenue  recognition in the information  technology
     services  segment comply with Emerging Issues Task Force ("EITF") Issue No.
     00-21,  "Revenue  Arrangements  with Multiple  Deliverables" and with AICPA
     Statement of Position ("SOP") No. 97-2 "Software Revenue Recognition". ETIF
     No. 00-21 provides guidance on how to account for arrangements that involve
     the delivery or performance of multiple products, services and/or rights to
     use  assets.  SOP No. 97-2  requires  revenue to be  recognized  only after
     software  is  delivered,  all  significant  obligations  of the Company are
     fulfilled, and all significant  uncertainties regarding customer acceptance
     have expired.  In addition,  the information  technology services segment's
     revenues  under  long-term  service  contracts  are  accounted  for using a
     proportional  performance method or on a straight-line  basis in accordance
     with the Securities and Exchange  Commission's  Staff  Accounting  Bulletin
     ("SAB") No. 101 "Revenue Recognition in Financial  Statements",  as amended
     by SAB No. 104.

     The  Company's  technical  services  and  information  technology  services
     businesses  evaluate and adjust allowances for doubtful accounts receivable
     through a continuous process of assessing accounts  receivable  balances on
     individual  customers and on an overall  basis.  This process  consists of,
     among other tasks, a review of historical  collection  experience,  current
     aging status and financial condition of customers. As this process involves
     a significant  amount of judgment and  estimation,  and sometimes  involves
     significant  dollar amounts,  actual write-offs could differ from estimated
     amounts, which could have a material effect on the results of operations of
     the Company.

     The Company  follows the  provisions  of Statement of Financial  Accounting
     Standards  ("SFAS") No. 142, which eliminated 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,
     2005, 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 the Company at
     December 31, 2004, no impairment charge was required. Future evaluations of
     the fair value of goodwill  and other  intangible  assets are  dependent on
     many factors, several of which are out of the Company's control,  including
     the demand  for  services  provided.  To the  extent  that such  factors or
     conditions  change, it is possible that future  impairments could occur (up
     to the current goodwill carrying value of $13.8 million),  which could have
     a material effect on the results of operations of the Company.

     At June 30, 2005, the Company had a significant  amount of net deferred tax
     assets,  which consisted  principally of net operating loss  carryforwards,
     alternative  minimum tax credit  carryforwards  and  temporary  differences
     resulting from  differences in the tax and book basis of certain assets and
     liabilities.  The net operating loss carryforwards available as of December
     31, 2004 expire, if unused, as follows:  $1.2 million in 2006; $3.0 million
     in 2007;  $13.4 million in 2022; $10.9 million in 2023; and $1.2 million in
     2024. The alternative  minimum tax credit  carryforwards have no expiration
     date.  Based on evaluations  performed by the Company  pursuant to SFAS No.
     109 in the fourth quarter of 2003, a non-cash valuation  allowance of $12.1
     million was provided  with respect to the  Company's  federal and state net
     deferred tax assets.  The  utilization of net operating loss  carryforwards
     and  alternative  minimum  tax  credit  carryforwards  could be  subject to
     limitation  in the event of a change in  ownership,  as  defined in the tax
     laws. To the extent that factors or conditions  change, it is possible that
     reductions in the non-cash  valuation  allowance  could occur,  which could
     have a material effect on the results of operating of the Company.


     Recent Accounting Pronouncement

     In December of 2004, the Financial  Accounting  Standards Board issued SFAS
     No. 123 (revised  2004),  "Share-Based  Payment"  ("SFAS No. 123R"),  which
     addresses the accounting for share-based  payment  transactions in which an
     enterprise receives employee services in exchange for equity instruments of
     the  enterprise,  or  liabilities  that are based on the fair  value of the
     enterprise's  equity  instruments or that may be settled by the issuance of
     such equity  instruments.  SFAS No. 123R  eliminates the ability to account
     for share-based compensation  transactions using the intrinsic value method
     under Accounting  Principles Board Opinion 25, "Accounting for Stock Issued
     to Employees",  and generally  requires that such transactions be accounted
     for using a fair-value-based  method.  The Company is currently  evaluating
     the provisions of SFAS No. 123R to determine which  fair-value-based  model
     and  transitional  provision to follow upon adoption.  The alternatives for
     transition  include  either  the  modified   prospective  or  the  modified
     retrospective  methods.  The  modified  prospective  method  requires  that
     compensation  expense  be  recorded  for all  unvested  stock  options  and
     restricted  stock as the requisite  service is rendered  beginning with the
     first  quarter of adoption.  The  modified  retrospective  method  requires
     recording  compensation  expense  for stock  options and  restricted  stock
     beginning with the first period restated.  Under the modified retrospective
     method,  prior  periods may be restated  either as of the  beginning of the
     year of  adoption  or for all  periods  presented.  SFAS No.  123R  will be
     effective  for the  Company  beginning  in the first  quarter of 2006.  The
     impact of adoption on the Company's  consolidated  financial  statements is
     still being evaluated.




<PAGE>
XANSER CORPORATION AND SUBSIDIARIES


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

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The principal market risks pursuant to this Item (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 and
fluctuations in foreign currency.

The Company  centrally  manages its debt and investment  portfolios  considering
investment  opportunities  and risks,  tax  consequences  and overall  financing
strategies.  The Company's  investment  portfolio  consists of cash equivalents;
accordingly,   the  carrying  amounts  approximate  fair  value.  The  Company's
investments  are not material to the financial  position or  performance  of the
Company.  Assuming  variable  rate debt of $11.5 million at June 30, 2005, a one
percent  increase in interest rates would increase  annual  interest  expense by
approximately $0.1 million.

A  significant  portion  of  the  technical  services  business  is  exposed  to
fluctuations in foreign currency  exchange rates. See  "Management's  Discussion
and  Analysis  of  Financial  Condition  and Results of  Operations  - Technical
Services."  Based on annual 2004 foreign  currency-based  revenues and operating
income  of  $90.6  million  and  $10.6  million,  respectively,  a  one  percent
fluctuation  of all  applicable  foreign  currencies  would  result in an annual
change in  revenues  and  operating  income of $0.9  million  and $0.1  million,
respectively.


Item 4. Controls and Procedures

The Company's principal executive officer and principal financial officer, after
evaluating,  as of June 30, 2005, the effectiveness of the Company's  disclosure
controls and  procedures  (as defined in Rules  13a-15(e)  and  15d-15(e) of the
Securities  Exchange Act of 1934),  have  concluded  that, as of such date,  the
Company's  disclosure  controls and  procedures  are  adequate and  effective to
ensure that material  information  relating to the Company and its  consolidated
subsidiaries would be made known to them by others within those entities.

During  the  quarter  ended  June 30,  2005,  there  have been no changes in the
Company's  internal  controls  over  financial  reporting  that have  materially
affected, or are reasonably likely to materially affect, those internal controls
subsequent to the date of the  evaluation.  As a result,  no corrective  actions
were required or undertaken.


<PAGE>
XANSER CORPORATION AND SUBSIDIARIES


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

                           Part II - Other Information

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

The annual meeting of the Company stockholders was held on June 22, 2005 for the
purpose  of  electing  the Board of  Directors.  Proxies  for the  meeting  were
solicited  pursuant to Section 14(a) of the Securities and Exchange Act of 1934,
and there was no solicitation in opposition to management's  solicitations.  All
of the Company's  nominees were elected.  Stockholder  votes with respect to the
election of director at the annual meeting were as follows:


<TABLE>
<CAPTION>

                                                                                Number of Shares
                                                                   ------------------------------------------
                                                                     Votes For        Votes Withheld/Against
                                                                   -------------      -----------------------
<S>                                                                 <C>                           <C>
         Sangwoo Ahn                                                28,789,868                    908,063
         John R. Barnes                                             28,790,869                    907,062
         Charles R. Cox                                             28,798,748                    899,183
         Hans Kessler                                               28,797,890                    900,041

</TABLE>

Mr. James R. Whatley,  a nominee for  director,  passed away prior to the annual
meeting and the size of the Board of Directors was reduced to four members.

Item 6. Exhibits

     (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,  as amended  and  restated  March 10,
               2005, filed as exhibit 3.8 to Registrant's Form 10-K for the year
               ended December 31, 2004, 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.

          31.1 Certification of Chief Executive Officer, Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002, dated August 15, 2005.

          31.2 Certification of Chief Financial Officer, Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002, dated August 15, 2005.

          32.1 Certification  of Chief  Executive  Officer,  Pursuant to Section
               906(a) of the Sarbanes-Oxley Act of 2002, dated August 15, 2005.

          32.2 Certification  of Chief  Financial  Officer,  Pursuant to Section
               906(a) of the Sarbanes-Oxley Act of 2002, dated August 15, 2005.



                                    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, thereunto duly authorized.



                                         XANSER CORPORATION
                                         (Registrant)


Date:  August 15, 2005                         //s//  HOWARD C. WADSWORTH
                                         ---------------------------------------
                                         Howard C. Wadsworth
                                         Chief Accounting Officer
                                         (Duly Authorized Officer)


<PAGE>
                                                                    Exhibit 31.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, John R. Barnes, Chief Executive Officer of Xanser Corporation certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Xanser Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this quarterly report is being prepared;

     b)   [intentionally omitted pursuant to SEC Release No. 34-47986];

     c)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this quarterly  report our conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the end of the period cover by this quarterly report, based on such
          evaluation; and

     d)   disclosed  in this  quarterly  report any  change in the  registrant's
          internal  control over financial  reporting  that occurred  during the
          registrant's most recent fiscal quarter that has materially  affected,
          or  is  reasonably  likely  to  materially  affect,  the  registrant's
          internal control over financial reporting; and

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.



Date: August 15, 2005


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


<PAGE>
                                                                    Exhibit 31.2


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Howard C. Wadsworth,  Chief Financial Officer of Xanser  Corporation  certify
that:

1.   I have reviewed this quarterly report on Form 10-Q of Xanser Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this quarterly report is being prepared;

     b)   [intentionally omitted pursuant to SEC Release No. 34-47986];

     c)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this quarterly  report our conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the end of the period cover by this quarterly report, based on such
          evaluation; and

     d)   disclosed  in this  quarterly  report any  change in the  registrant's
          internal  control over financial  reporting  that occurred  during the
          registrant's most recent fiscal quarter that has materially  affected,
          or  is  reasonably  likely  to  materially  affect,  the  registrant's
          internal control over financial reporting; and

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.



Date: August 15, 2005



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



<PAGE>
                                                                    Exhibit 32.1



                    CERTIFICATION 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, to his knowledge, the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2005, 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.

     This written  statement is being  furnished to the  Securities and Exchange
Commission  as an exhibit to such Form 10-Q.  A signed  original of this written
statement  required by Section 906 has been provided to Xanser  Corporation  and
will be retained by Xanser  Corporation  and  furnished  to the  Securities  and
Exchange Commission or its staff upon request.

Date:    August 15, 2005


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




<PAGE>
                                                                    Exhibit 32.2



                    CERTIFICATION 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, to his knowledge, the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2005, 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.

     This written  statement is being  furnished to the  Securities and Exchange
Commission  as an exhibit to such Form 10-Q.  A signed  original of this written
statement  required by Section 906 has been provided to Xanser  Corporation  and
will be retained by Xanser  Corporation  and  furnished  to the  Securities  and
Exchange Commission or its staff upon request.

Date:    August 15, 2005



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