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

                                  UNITED STATES
                       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 September 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 by check mark whether the  registrant is a shell company (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  October 31, 2005
---------------------                          ---------------------------------
     No par value                                       34,275,683 shares

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

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES


FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2005
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                   Page No.

<S>               <C>                                                                              <C>
                           Part I. Financial Information

Item 1.           Financial Statements (Unaudited)

                  Condensed Consolidated Statements of Income - Three and
                    Nine Months Ended September 30, 2005 and 2004                                      1

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

                  Condensed Consolidated Statements of Cash Flows - Nine
                    Months Ended September 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                                    12

Item 3.           Quantitative and Qualitative Disclosure About Market Risk                           21

Item 4.           Controls and Procedures                                                             21


                           Part II. Other Information

Item 4.           Submission of Matters to a Vote of Security Holders                                 22

Item 6.           Exhibits                                                                            22


</TABLE>

<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands - Except Per Share Amounts)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                             Three Months Ended        Nine Months Ended
                                                September 30,             September 30,
                                           ----------------------    ----------------------
                                              2005         2004         2005         2004
                                           ---------    ---------    ---------    ---------
<S>                                        <C>          <C>          <C>          <C>
Revenues:
     Services                              $  39,883    $  35,385    $ 113,116    $ 101,541
     Products                                    518          379        5,925        2,043
                                           ---------    ---------    ---------    ---------
         Total revenues                       40,401       35,764      119,041      103,584
                                           ---------    ---------    ---------    ---------

Costs and expenses:
     Operating costs                          37,474       32,634      109,490       94,208
     Cost of products sold                       526          294        6,369        1,219
     Depreciation and amortization               900          842        2,729        2,612
     General and administrative                  891          733        2,327        2,277
     Other                                      (769)        --           (769)        --
                                           ---------    ---------    ---------    ---------
         Total costs and expenses             39,022       34,503      120,146      100,316
                                           ---------    ---------    ---------    ---------

Operating income (loss)                        1,379        1,261       (1,105)       3,268

Interest and other income, net                   213           32          487           97
Interest expense                                (256)        (266)        (792)        (743)
                                           ---------    ---------    ---------    ---------

Income (loss) before income taxes              1,336        1,027       (1,410)       2,622
Income tax (expense)                          (1,295)        (822)      (2,557)      (1,438)
                                           ---------    ---------    ---------    ---------
Net income (loss)                          $      41    $     205    $  (3,967)   $   1,184
                                           =========    =========    =========    =========

Earnings (loss) per common share - basic
   and diluted                             $    0.00    $    0.01    $   (0.12)   $    0.04
                                           =========    =========    =========    =========

</TABLE>

           See notes to condensed consolidated financial statements.
                                        1
<PAGE>
XANSER CORPORATION AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                            September 30,           December 31,
                                                                                2005                    2004
                                                                          ---------------        ------------------
                                                                             (Unaudited)
<S>                                                                        <C>                     <C>
            ASSETS
Current assets:
    Cash and cash equivalents                                              $       20,896          $      21,598
    Accounts receivable, trade                                                     41,717                 35,470
    Receivable from businesses distributed to common
        stockholders                                                                6,569                  6,699
    Inventories                                                                    10,625                  9,131
    Prepaid expenses and other                                                      3,727                  5,283
                                                                           --------------          -------------
        Total current assets                                                       83,534                 78,181
                                                                           --------------          -------------

Property and equipment                                                             40,158                 46,571
Less accumulated depreciation and amortization                                     28,274                 32,933
                                                                           --------------          -------------
    Net property and equipment                                                     11,884                 13,638
                                                                           --------------          -------------

Excess of cost over fair value of net assets of
    acquired businesses                                                            13,802                 13,802
Deferred income taxes and other assets                                              5,597                  6,299
                                                                           --------------          -------------
                                                                           $      114,817          $     111,920
                                                                           ==============          =============

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term debt                                      $          436          $         524
    Accounts payable                                                                8,961                  5,416
    Accrued expenses                                                               26,930                 23,416
    Accrued income taxes                                                            8,414                  7,609
                                                                           --------------          -------------
        Total current liabilities                                                  44,741                 36,965
                                                                           --------------          -------------
Long-term debt, less current portion:
    Technical services                                                             11,074                 12,250
    Information technology services                                                   248                    248
    Parent company                                                                  5,000                  5,000
                                                                           --------------          -------------
        Total long-term debt, less current portion                                 16,322                 17,498
                                                                           --------------          -------------

Other liabilities                                                                     118                  1,567

Commitments and contingencies

Stockholders' equity:
    Common stock, without par value                                                 4,481                  4,335
    Additional paid-in capital                                                    124,299                126,550
    Treasury stock, at cost                                                       (20,347)               (26,180)
    Retained earnings (accumulated deficit)                                       (50,266)               (46,299)
    Accumulated other comprehensive income (loss)                                  (4,531)                (2,516)
                                                                           --------------          -------------
        Total stockholders' equity                                                 53,636                 55,890
                                                                           --------------          -------------
                                                                           $      114,817          $     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>
                                                                                          Nine Months Ended
                                                                                            September 30,
                                                                                  ---------------------------------
                                                                                        2005              2004
                                                                                  -------------      --------------
<S>                                                                               <C>                <C>
Operating activities:
   Net income (loss)                                                              $      (3,967)     $        1,184
   Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
        Depreciation and amortization                                                     2,729               2,612
       Gain on sale of assets                                                            (2,102)              -
       Non recurring expenses                                                             1,333               -
       Deferred income taxes                                                                385                (880)
       Other                                                                                (92)                242
       Changes in working capital components                                             (2,894)               (843)
                                                                                  -------------      --------------
         Net cash provided by operating activities                                       (4,608)              2,315
                                                                                  -------------      --------------

Investing activities:
   Capital expenditures                                                                  (3,210)             (3,166)
   Proceeds from sale of assets                                                           5,400               -
   Employee Stock Option exercised                                                        2,313                  68
   Other                                                                                    869                 354
                                                                                  -------------      --------------
       Net cash used in investing activities                                              5,372              (2,744)
                                                                                  -------------      --------------
Financing activities:
   Issuance of debt                                                                         448               1,702
   Payments on debt                                                                      (1,739)             (4,442)
   Increase (decrease) in receivable from businesses distributed
     to common stockholders                                                                 130                (124)
                                                                                  -------------      --------------
       Net cash provided by (used in) financing activities                               (1,161)             (2,864)
                                                                                  -------------      --------------
Effect of exchange rate changes on cash                                                    (305)               (111)
                                                                                  -------------      --------------
Decrease in cash and cash equivalents                                                      (702)             (3,404)
Cash and cash equivalents at beginning of period                                         21,598              21,240
                                                                                  -------------      --------------
Cash and cash equivalents at end of period                                        $      20,896      $       17,836
                                                                                  =============      ==============
Supplemental cash flow information:
   Cash paid for interest                                                         $         863      $          822
                                                                                  =============      ==============
   Cash paid for income taxes                                                     $       1,476      $        2,122
                                                                                  =============      ==============

</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 nine  month  periods  ended
     September  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 September 30, 2005, and
     the  consolidated  results of income and cash flows for the  periods  ended
     September  30,  2005 and  2004.  Operating  results  for the three and nine
     months  ended  September  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. 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.  At
     September 30, 2005, $6.6 million was recorded as receivable from businesses
     distributed  to  common  stockholders  pursuant  to the  provisions  of 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 to give
     the option holders the opportunity to become owners of the Company's common
     stock sooner than they could have under their original grants Shares issued
     upon exercise of the previously  unvested  portion of those options must be
     held and not sold until the date on which they would have otherwise  vested
     under the terms of the original  option  grant and the plan.  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 for the periods  indicated  if the fair
     value based method had been applied:

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

<S>                                                  <C>             <C>              <C>            <C>
     Reported net income (loss)                      $          41   $         205    $      (3,967) $        1,184

     Stock-based employee compensation
         expense determined under the fair
         value based method, net of income
         taxes                                                 (49)           (108)            (509)           (144)
                                                     -------------   -------------    -------------  --------------
     Pro forma net income (loss)                     $          (8)  $          97    $      (4,476) $        1,040
                                                     =============   =============    =============  ==============
     Earnings (loss) per share:
        As reported - basic and diluted              $        0.00   $        0.01    $       (0.12) $         0.04
                                                     =============   =============    =============  ==============
        Pro forma - basic and diluted                $        0.00   $        0.00    $       (0.14) $         0.03
                                                     =============   =============    =============  ==============

</TABLE>


2.   DEFERRED STOCK UNIT PLAN DISTRIBUTION

     In July 2005,  the Xanser  Deferred  Stock Unit Plan ("DSU  Plan") that was
     initiated  during 1996 was terminated and all accounts were  distributed to
     DSU Plan participants.  Approximately 681,000 shares of Xanser common stock
     were  issued to DSU Plan  participants  from  shares held by the Company as
     Treasury stock.  Kaneb Services LLC ("KSL")  provided KSL shares related to
     deferred  stock units that resulted from the  distribution  of KSL in 2001.
     The KSL shares were redeemed in connection  with the  acquisition of KSL by
     Valero L.P. in July 2005 and  approximately  $6.2  million was paid to Plan
     participants from the redemption of the KSL shares and from previously paid
     KSL cash distributions.


3.   COMPREHENSIVE INCOME

     Comprehensive income for the three and nine months ended September 30, 2005
     and 2004 is as follows:

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

<S>                                                  <C>             <C>              <C>            <C>
     Net income (loss)                               $          41   $         205    $      (3,967) $        1,184
     Foreign currency translation
        adjustment                                             134              34           (2,015)           (461)
                                                     -------------   -------------    -------------  --------------
     Comprehensive income (loss)                     $         175   $         239    $      (5,982) $          723
                                                     =============   =============    =============  ==============
</TABLE>

     At  September   30,  2005  and  December   31,  2004,   accumulated   other
     comprehensive  income consisted of cumulative  losses from foreign currency
     translation adjustments of $(0.9) 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.


4.   EARNINGS (LOSS) PER SHARE

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

                                                                                     Weighted
                                                                                     Average
                                                                                      Common           Per-Share
                                                                Net Income            Shares             Amount
                                                             ---------------     ---------------    ----------------
<S>                                                          <C>                 <C>                <C>
     Three Months Ended September 30, 2005
     -------------------------------------
         Basic earnings per share -
           Net income                                        $            41              33,844   $           0.00
                                                                                                   ================
         Effect of dilutive securities                                  -                    351
                                                             ---------------     ---------------
         Diluted earnings per share -
           Net income                                        $            41              34,195   $           0.00
                                                             ===============     ===============   ================
     Three Months Ended September 30, 2004
     -------------------------------------
         Basic earnings per share -
           Net income                                        $           205              32,039   $           0.01
                                                                                                   ================
         Effect of dilutive securities                                  -                  1,054
                                                             ---------------     ---------------
         Diluted earnings per share -
           Net income                                        $           205              33,093   $           0.01
                                                             ===============     ===============   ================

     Nine Months Ended September 30, 2005
     ------------------------------------
         Basic earnings (loss) per share -
           Net income (loss)                                 $        (3,967)             32,420   $         (0.12)
                                                                                                   ===============
         Effect of dilutive securities                                  -                   -
                                                             ---------------     ---------------
         Diluted earnings (loss) per share -
           Net income (loss)                                 $        (3,967)             32,420   $         (0.12)
                                                             ===============     ===============   ================

     Nine Months Ended September 30, 2004
     ------------------------------------
         Basic earnings per share -
           Net income                                        $         1,184              32,033   $           0.04
                                                                                                   ================
         Effect of dilutive securities                                  -                  1,089
                                                             ---------------     ---------------
         Diluted earnings per share -
           Net income                                        $         1,184              33,122   $           0.04
                                                             ===============     ===============   ================
</TABLE>

     As a result of the net loss for the nine months ended  September  30, 2005,
     2,619,000 stock options at a weighted  average price of $1.92 were excluded
     from the computation of diluted earnings per share because the effect would
     be  anti-dilutive.  Options to purchase 133,500 and 30,432 shares of common
     stock at weighted  average  prices of $2.79 and $3.07,  respectively,  were
     outstanding  for the three and nine month periods ended September 30, 2005,
     respectively,  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 955,542 and
     172,736  shares of common  stock at  weighted  average  prices of $2.49 and
     $2.69, respectively,  were outstanding for the three and nine month periods
     ended  September  30,  2004,  respectively,  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 nine  month
     periods ended  September 30, 2005 and 2004,  because the effects of assumed
     conversion would be anti-dilutive.


5.   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                Nine Months Ended
                                                               September 30,                September 30,
                                                     -----------------------------    -----------------------------
                                                          2005            2004             2005           2004
                                                     -------------   -------------    -------------  --------------
                                                                             (in thousands)

<S>                                                  <C>             <C>              <C>            <C>
       Net periodic pension cost:
           Service cost                              $         119   $         116    $         367  $          348
           Interest cost                                       890             860            2,740           2,582
           Expected return on plan assets                     (963)           (892)          (2,966)         (2,676)
           Amortization of prior service cost                  (27)            (28)             (84)            (83)
           Recognized net gain                                 132             184              406             550
                                                     -------------   -------------    -------------  --------------
       Net periodic pension cost                     $         151   $         240    $         463  $          721
                                                     =============   =============    =============  ==============
</TABLE>


6.   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.


7.   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                Nine Months Ended
                                                            September 30,                    September 30,
                                                     -----------------------------    -----------------------------
                                                          2005           2004              2005           2004
                                                     -------------   -------------    -------------  --------------
                                                                             (in thousands)
<S>                                                  <C>             <C>              <C>            <C>
     Business segment revenues:
        Technical services                           $      35,403   $      29,781    $     100,911  $       86,521
        Information technology                               4,998           5,983           18,130          17,063
                                                     -------------   -------------    -------------  --------------
                                                     $      40,401   $      35,764    $     119,041  $      103,584
                                                     =============   =============    =============  ==============
     Technical services segment revenues:
        Underpressure services                       $      12,774   $      13,068    $      38,049  $       35,818
        Turnaround services                                 16,307          13,707           45,605          42,055
        Other services                                       6,322           3,006           17,257           8,648
                                                     -------------   -------------    -------------  --------------
                                                     $      35,403   $      29,781    $     100,911  $       86,521
                                                     =============   =============    =============  ==============
     Business segment profit:
        Technical services                           $       3,542   $       2,584    $       7,986  $        5,839
        Information technology services                     (1,272)           (590)          (6,764)           (294)
        General corporate                                     (891)           (733)          (2,327)         (2,277)
                                                     -------------   -------------    -------------  --------------
           Operating income (loss)                           1,379           1,261           (1,105)          3,268
        Interest and other income, net                         213              32              487              97
        Interest expense                                      (256)           (266)            (792)           (743)
                                                     -------------   -------------    -------------  --------------
        Income (loss) before income taxes            $       1,336   $       1,027    $      (1,410) $        2,622
                                                     =============   =============    =============  ==============
</TABLE>

<TABLE>
<CAPTION>
                                                                                 September 30,       December 31,
                                                                                     2005                2004
                                                                                ---------------    ----------------
                                                                                             (in thousands)
<S>                                                                             <C>                <C>
     Total assets:
        Technical services                                                      $        72,980    $         69,962
        Information technology services                                                  22,137              16,720
        General corporate                                                                19,700              25,238
                                                                                ---------------    ----------------
                                                                                $       114,817    $        111,920
                                                                                ===============    ================
</TABLE>


8.   OTHER

     During the third  quarter the Company  embarked  on an  aggressive  plan to
     reduce infrastructure cost, eliminate  redundancies and dispose of non core
     assets.  The objectives of the plan were to also exploit untapped synergies
     between its  operating  divisions.  Consistent  with the plan,  the Company
     entered  into a series of  transactions  including a sale of  software  and
     technology  assets which  resulted in a gain of $2.1 million,  consolidated
     and closing of leased  facilities  and write down of related  assets  which
     resulted in a total charge of $1.3  million.  The  aggregate  net effect of
     these  transactions  was  a  gain  of  $769,000  and  is  included  in  the
     consolidated statement of income as other cost and expenses.


<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.  This 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,  which is conducted
     through  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                  Nine Months Ended
                                                          September 30,                      September 30,
                                                 -------------------------------    -------------------------------
                                                     2005              2004             2005              2004
                                                 -------------    --------------    -------------   ---------------
                                                             (in thousands - except per share amounts)

<S>                                              <C>              <C>               <C>             <C>
     Revenues:
        Technical services                       $      35,403    $       29,781    $     100,911   $        86,521
        Information technology services                  4,998             5,983           18,130            17,063
                                                 -------------    --------------    -------------   ---------------
                                                 $      40,401    $       35,764    $     119,041   $       103,584
                                                 =============    ==============    =============   ===============

     Operating income (loss):
        Technical services                       $       3,542    $        2,584    $       7,986   $         5,839
        Information technology services                 (1,272)             (590)          (6,764)             (294)
        General and administrative
           Expenses                                       (891)             (733)          (2,327)           (2,277)
                                                 -------------    --------------    -------------   ---------------
                                                 $       1,379    $        1,261    $      (1,105)  $         3,268
                                                 =============    ==============    =============   ===============

     Net income (loss)                           $          41    $          205    $      (3,967)  $         1,184
                                                 =============    ==============    =============   ===============
</TABLE>


<TABLE>
<CAPTION>
                                                       Three Months Ended                  Nine Months Ended
                                                          September 30,                      September 30,
                                                 -------------------------------    -------------------------------
                                                     2005              2004             2005              2004
                                                 -------------    --------------    -------------   ---------------
                                                             (in thousands - except per share amounts)
<S>                                              <C>              <C>               <C>             <C>
     Earnings (loss) per common share
        - basic and diluted                      $        0.00    $        0.01     $       (0.12)  $         0.04
                                                 =============    =============     =============   ==============
     Capital expenditures                        $         532    $        1,067    $       3,210   $         3,166
                                                 =============    ==============    =============   ===============

</TABLE>

     For the three  months  ended  September  30,  2005,  consolidated  revenues
     increased by $4.6  million,  or 13%, when compared to the same 2004 period,
     due to a $5.6  million  increase in revenues  from the  technical  services
     business  (see  "Technical  Services"  below),  offset  by a  $1.0  million
     decrease in revenues from the information technology services business (see
     "Information Technology Services" below). Consolidated operating income for
     the three months ended September 30, 2005 increased by $0.1 million, or 9%,
     when  compared to the same 2004  period,  due  primarily  to a $1.0 million
     increase in operating income from the technical services  business,  offset
     by a $0.7 million decrease from the information  technology  business and a
     $0.2 million increase in general and administrative expense. Net income for
     the three months ended  September 30, 2005 decreased by $0.2 million,  when
     compared to the same 2004 period,  as the increase in operating  income was
     more than  offset by a reduction  in income tax  benefits  recognized  (see
     "Income Taxes" below).

     For the  nine  months  ended  September  30,  2005,  consolidated  revenues
     increased by $15.5 million,  or 15%, when compared to the same 2004 period,
     due to a $14.4 million  increase in revenues  from the  technical  services
     business (see "Technical  Services"  below) and a $1.1 million  increase in
     revenues   from  the   information   technology   services   business  (see
     "Information Technology Services" below). Consolidated operating income for
     the nine months  ended  September  30, 2005  decreased by $4.4 million when
     compared  to the  same  2004  period,  due to a $2.1  million  increase  in
     operating income from the technical  services  business which was more than
     offset by a $6.5 million  increase in operating  loss from the  information
     technology  services  business and a $0.1  million  increase in general and
     administrative  expense.  Overall,  net  income for the nine  months  ended
     September 30, 2005 decreased by $5.2 million 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.  The Company's technical services business continued to show both
     revenue and operating  income  improvements  in the quarter ended September
     30, 2005 and operating losses in the information  technology services group
     continue to be reduced as the Company  further  reduced  costs and improved
     profitability.



     Technical Services
<TABLE>
<CAPTION>
                                                       Three Months Ended                 Nine Months Ended
                                                          September 30,                      September 30,
                                                   ---------------------------      ------------------------------
                                                      2005             2004             2005            2004
                                                   -----------     -----------      -------------   --------------
                                                                          (in thousands)

<S>                                                <C>             <C>              <C>             <C>
     Revenues:
         United States                             $     7,176     $     6,200      $      21,499   $       20,352
         Europe                                         21,836          19,627             61,741           53,818
         Asia-Pacific                                    6,391           3,954             17,671           12,351
                                                   -----------     -----------      -------------   --------------
              Total Revenues                       $    35,403     $    29,781      $     100,911   $       86,521
                                                   ===========     ===========      =============   ==============

     Operating income:
         United States                             $       (23)    $      (249)     $         (31)  $         (263)
         Europe                                          3,493           3,031              7,878            6,129
         Asia-Pacific                                    1,032             376              2,852            1,589
         Headquarters                                     (960)           (574)            (2,713)          (1,616)
                                                   -----------     -----------      -------------   --------------
              Total operating income               $     3,542     $     2,584      $       7,986   $        5,839
                                                   ===========     ===========      =============   ==============
     Capital expenditures                          $       352     $       518      $       1,863   $        2,055
                                                   ===========     ===========      =============   ==============

</TABLE>
     For the three months ended  September 30, 2005,  revenues for the technical
     services business  increased by $5.6 million,  or 19%, when compared to the
     same 2004  period.  In the  United  States,  third  quarter  2005  revenues
     increased by $1.0  million,  or 16%,  when compared to the third quarter of
     2004, due to increases in underpressure,  turnaround and other services. In
     Europe, third quarter 2005 revenues increased by $2.2 million, or 11%, when
     compared to the same 2004 period,  due to a  significant  increase in other
     process plant services and favorable  foreign  currency  exchange rates. In
     Asia-Pacific,  third  quarter 2005 revenues  increased by $2.4 million,  or
     62%, when compared to the  corresponding  2004 period,  due to increases in
     all services and favorable foreign currency exchange rates.

     For the three months ended September 30, 2005, technical services operating
     income  increased by $1.0  million,  or 37%, when compared to the same 2004
     period.  In the United States,  third quarter 2005 operating loss decreased
     by $0.2 million when compared to the same period in 2004, due to the higher
     revenue  levels.  In Europe,  operating  income for the three  months ended
     September 30, 2005 increased by $0.5 million when compared to the same 2004
     period,  due to the higher revenue levels,  partially offset by an increase
     in general and  administrative  costs. In Asia-Pacific,  third quarter 2005
     operating income  increased by $0.7 million,  or 174%, when compared to the
     third quarter of 2004,  due to the higher  revenues and stronger  operating
     margins.

     For the nine months ended  September  30, 2005,  revenues for the technical
     services business increased by $14.4 million,  or 17%, when compared to the
     same 2004 period. In the United States,  revenues for the nine months ended
     September 30, 2005  increased by $1.1 million,  or 6%, when compared to the
     corresponding  2004 period,  due to increases  in  underpressure  offset by
     decreases  in  turnaround  and other  process  plant  services.  In Europe,
     revenues for the nine months ended  September  30, 2005,  increased by $7.9
     million, or 15%, when compared to the nine month period ended September 30,
     2004, due to significant increases in underpressure and other process plant
     services and favorable  foreign  currency  exchange rates. In Asia-Pacific,
     revenues for the nine months  ended  September  30, 2005  increased by $5.3
     million, or 43%, when compared to the corresponding  period in 2004, due to
     a significant increase in turnaround, as well as increases in underpressure
     and other process plant services and favorable  foreign  currency  exchange
     rates.

     For the nine months ended September 30, 2005,  technical services operating
     income  increased by $2.1  million,  or 37%, when compared to the same 2004
     period. In the United States,  the operating loss for the nine months ended
     September 30, 2005 decreased by $0.2 million,  or 88%, when compared to the
     same 2004 period,  due primarily to the higher revenue  levels.  In Europe,
     operating income for the nine months ended September 30, 2005, increased by
     $1.7 million,  or 29%, when compared to the nine months ended September 30,
     2004,  due to the  higher  operating  income  in the  United  Kingdom,  the
     Netherlands and Norway,  offset by lower operating income in other European
     markets.  In  Asia-Pacific,  operating  income  for the nine  months  ended
     September 30, 2005 increased by $1.3 million, or 79%, due to overall higher
     revenues.

     Information Technology Services
<TABLE>
<CAPTION>

                                                       Three Months Ended                 Nine Months Ended
                                                          September 30,                      September 30,
                                                   ---------------------------      ------------------------------
                                                      2005             2004             2005            2004
                                                   -----------     -----------      -------------   --------------
                                                                          (in thousands)

<S>                                                <C>             <C>              <C>             <C>
     Revenues                                      $     4,998     $     5,983      $      18,130   $       17,063
                                                   ===========     ===========      =============   ==============
     Operating income (loss)                       $    (1,272)    $      (590)     $      (6,764)          $ (294)
                                                   ===========     ===========      =============   ==============
     Capital expenditures                          $       180     $       549      $       1,347   $        1,111
                                                   ===========     ===========      =============   ==============
</TABLE>


     For the three month period ended September 30, 2005, information technology
     revenues decreased by $1.0 million,  or 16%, when compared to the same 2004
     period,  while revenues for the nine month period ended  September 30, 2005
     increased by $1.1 million, or 6%.

     For the three and nine month periods ended September 30, 2005,  information
     technology  services  operating  loss  increased  by $0.7  million and $6.5
     million,  respectively,  when compared to the same 2004 periods,  primarily
     due to higher  operating and general and  administrative  costs levels that
     resulted from a focus on lower margin  equipment sales with little services
     work. In the third quarter of 2005, the Company  continued to make progress
     in  refocusing  its revenue  efforts on higher margin  services  offerings.
     Software,  technology and other assets not consistent  with future services
     offerings  were sold or written off and leased  facilities  not  supporting
     those  future  services  offerings  were  consolidated  or closed.  The net
     aggregate effect of these transactions was a gain of $0.8 million.


     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 nine month periods  ended  September 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 operating activities was $0.8 million and $2.3 million for
     the nine month periods ended September 30, 2005 and 2004, respectively. The
     2005 decrease,  when compared to the same 2004 period, was due primarily to
     decreases in the information  technology operating income.  During the nine
     months ended September 30, 2005, the Company's working capital requirements
     for  operations  and capital  expenditures  were funded  through the use of
     internally generated funds.

     Capital  expenditures  were $3.2 million for the nine month  periods  ended
     September 30, 2005 and 2004. Consolidated capital expenditures for the year
     2005 have been  estimated  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 September 30, 2005,  $10.5 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 (5.32% at September  30,  2005),  based on either the LIBOR
     rate or prime  rate,  have a  commitment  fee on the unused  portion of the
     facility and contain  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 September 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  September  30,  2005) are  convertible  into shares of the
     Company's common stock at the conversion price of $5.26 per share.

     The following  schedule sets forth, by period, the Company's debt repayment
     obligations and material  contractual  commitments at December 31, 2004. On
     September 30, 2005, a non-scheduled  prepayment of $1.0 million was paid on
     the technical services credit facility.

<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
     September 30, 2005, or for the three and nine month periods ended September
     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 nine month periods ended September 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
     September  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 September 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  operations  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 Disclosures 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 $10.5 million at September 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  September  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  September 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

     None.

Item 6. 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 November 14, 2005.

     31.2 Certification of Chief Financial  Officer,  Pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002, dated November 14, 2005.

     32.1 Certification of Chief Executive  Officer,  Pursuant to Section 906(a)
          of the Sarbanes-Oxley Act of 2002, dated November 14, 2005.

     32.2 Certification of Chief Financial  Officer,  Pursuant to Section 906(a)
          of the Sarbanes-Oxley Act of 2002, dated November 14, 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:  November 14, 2005                  //s//  HOWARD C. WADSWORTH
                                     -------------------------------------------
                                     Howard C. Wadsworth
                                     Sr. Vice President, Treasurer and Secretary
                                     (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: November 14, 2005




                                             //s//  JOHN R. BARNES
                                    --------------------------------------------
                                    John R. Barnes
                                    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: November 14, 2005



                                       //s// HOWARD C. WADSWORTH
                                    --------------------------------------------
                                    Howard C. Wadsworth
                                    Sr. 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  September  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: November 14, 2005




                                             //s//  JOHN R. BARNES
                                    --------------------------------------------
                                    John R. Barnes
                                    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  September  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:    November 14, 2005


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