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                             UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549
                         -----------------------

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

                                FORM 10-Q

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

                             QUARTERLY REPORT

                 Pursuant to Section 13 or 15(d) of the
                     Securities Exchange Act of 1934

                For the Quarter Ended September 30, 1996
                       Commission File No. 1-2921

                        -----------------------
                                   
                  PANHANDLE EASTERN PIPE LINE COMPANY
        (Exact name of registrant as specified in its charter)
                                   
                        A Delaware Corporation
               (State of Incorporation or Organization)
                                   
                              44-0382470
                   (IRS Employer Identification No.)
                                   
   5400 Westheimer Court, P.O. Box 1642, Houston, Texas  77251-1642
     (Address of principal executive offices, including zip code)
                                   
                            (713) 627-5400
         (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 twelve 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:    

The Registrant meets the conditions set forth in General Instructions
(H)(1)(a) and (b) of the Form 10-Q and is therefore filing this Form 10-Q with
the reduced disclosure format.  Part I, Item 2 has been reduced and Part II,
Item 4 has been omitted in accordance with such Instruction H.  

The Registrant's parent, PanEnergy Corp (File No. 1-8157), files reports and
proxy materials pursuant to the Securities Exchange Act of 1934.  

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

             Class                    Outstanding at October 31, 1996
    --------------------------         -------------------------------
    Common Stock, no par value                      1,000

==============================================================================<PAGE>
<PAGE>
                      PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements - Unaudited

           Panhandle Eastern Pipe Line Company and Subsidiaries
                     CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                      Periods Ended September 30      
                                          Three Months         Nine Months   
                                              ---------------                    --------------- 
Millions                       1996   1995      1996    1995  
--------                      ------ ------    ------  ------ 
<S>                                  <C>       <C>     <C>            <C>    
Operating Revenues
 Transportation and storage 
   of natural gas             $117.2 $134.5    $374.9  $390.1 
 Other                           6.0    5.9      18.1    17.6 
                              ------ ------    ------  ------ 
   Total (Note 2)              123.2  140.4     393.0   407.7 
                              ------ ------    ------  ------ 
Costs and Expenses
 Operating and maintenance      51.5   49.2     132.0   148.2 
 General and administrative            16.6      17.5    64.4           53.1 
 Depreciation and amortization         13.8      14.6    43.3           44.0 
 Miscellaneous taxes             6.4    6.7      20.5    21.6 
                              ------ ------    ------  ------ 
   Total                        88.3   88.0     260.2   266.9 
                              ------ ------    ------  ------ 

Operating Income                34.9   52.4     132.8   140.8 
                              ------ ------    ------  ------ 
Other Income and Deductions
 Equity in earnings of 
   unconsolidated affiliates                      1.1     1.1            4.1                 6.2 
 Other income, net of deductions       11.1       1.3    12.3           (3.8)
                              ------ ------    ------  ------ 
   Total                        12.2    2.4      16.4     2.4 
                              ------ ------    ------  ------ 

Earnings Before Interest and Tax       47.1      54.8   149.2          143.2 
                              ------ ------    ------  ------ 
Interest Expense
 Parent                          9.6    -        26.3     -   
 Other                           5.9   10.0      18.6    30.2 
                              ------ ------    ------  ------ 
   Total                        15.5   10.0      44.9    30.2 
                              ------ ------    ------  ------ 
Earnings Before Income Tax      31.6   44.8     104.3   113.0 

Income Tax                      12.3   17.7      40.5    44.5 
                              ------ ------    ------  ------ 
NET INCOME                    $ 19.3 $ 27.1    $ 63.8  $ 68.5 
                              ====== ======    ======  ====== 
</TABLE>

        See accompanying notes to consolidated financial statements<PAGE>
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)

           Panhandle Eastern Pipe Line Company and Subsidiaries
                        CONSOLIDATED BALANCE SHEET
                                  ASSETS
<TABLE>
<CAPTION>
                                                 September 30,  December 31, 
Millions                                             1996           1995     
--------                                         -------------  ------------ 
<S>                                                <C>            <C>        
Current Assets
 Cash and cash equivalents                        $     -   $     0.2 
 Accounts receivable, net                 15.4         39.2 
 Inventory and supplies                   58.2         55.3 
 Current deferred income tax                            3.7      13.0 
 Other (Note 3)                           65.5         46.1 
                                                  --------- --------- 
   Total                                 142.8        153.8 
                                                  --------- --------- 


Investments
 Advances and note receivable - parent                662.0     566.9 
 Other                                    53.2         48.3 
                                                  --------- --------- 
   Total                                 715.2        615.2 
                                                  --------- --------- 


Plant, Property and Equipment
 Original cost                                      2,656.8   2,782.1 
 Accumulated depreciation and amortization                   (1,738.2) (1,818.8)
                                                  --------- --------- 
   Net plant, property and equipment                            918.6     963.3 
                                                  --------- --------- 

Deferred Charges                         118.7        155.1 
                                                  --------- --------- 

TOTAL ASSETS                                      $ 1,895.3 $ 1,887.4 
                                                  ========= ========= 
</TABLE>


       See accompanying notes to consolidated financial statements  <PAGE>
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)

           Panhandle Eastern Pipe Line Company and Subsidiaries
                        CONSOLIDATED BALANCE SHEET
                   LIABILITIES AND STOCKHOLDER'S EQUITY 
<TABLE>
<CAPTION>
                                                 September 30,  December 31, 
Millions                                             1996           1995     
--------                                         -------------  ------------ 
<S>                                                <C>            <C>        
Current Liabilities
 Long-term debt due within one year                          $    -    $    4.5 
 Notes payable - parent (Note 4)                      500.0     400.0 
 Rate refund provisions (Note 2)                       38.3      53.3 
 Accounts payable                        20.8          31.0 
 Accrued income tax - parent                           50.0      55.3 
 Other accrued taxes                     30.7          18.8 
 Other (Note 3)                          63.7          59.1 
                                                   --------  -------- 
   Total                                703.5         622.0 
                                                   --------  -------- 

Deferred Liabilities and Credits
 Deferred income tax                    140.5         176.5 
 Other (Note 2)                         180.3         181.7 
                                                   --------  -------- 
   Total                                320.8         358.2 
                                                   --------  -------- 

Long-term Debt                          299.2         299.2 
                                                   --------  -------- 

Commitments and Contingent Liabilities 
 (Notes 2, 5, 6 and 7)

Common Stockholder's Equity
 Common stock, one thousand shares
   authorized, issued and outstanding,
   no par value                           1.0           1.0 
 Paid-in capital                        465.9         465.9 
 Retained earnings (Note 4)                           104.9     141.1 
                                                   --------  -------- 
   Total                                571.8         608.0 
                                                   --------  -------- 

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                   $1,895.3  $1,887.4 
                                                   ========  ======== 
</TABLE>


        See accompanying notes to consolidated financial statements<PAGE>
<PAGE>
Item 1.  Financial Statements - Unaudited (Continued)

            Panhandle Eastern Pipe Line Company and Subsidiaries
                   CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                    Nine Months Ended   
                                                    September 30     
                                                  ---------------------  
Millions                                    1996       1995   
--------                                   ------     ------  
<S>                                                  <C>        <C>     
Operating Activities
 Net income                                $ 63.8     $ 68.5 
 Adjustments to reconcile net income to operating
   cash flows:
      Depreciation and amortization                     43.3 44.0 
      Deferred income tax benefit                      (26.0)(5.7)
      Other non-cash items in net income                     (5.4)    (15.5)
      Net change in operating assets
       and liabilities                                  22.2            2.6 
                                           ------     ------ 
 Net Cash Flows Provided by Operating Activities        97.9           93.9 
                                           ------     ------ 
Investing Activities
 Net increase in advances and 
   note receivable - parent                            (93.8)         (64.3)
 Capital expenditures                       (32.0)     (36.9)
 Property retirements and other                         30.1 10.6 
                                           ------     ------ 
 Net Cash Flows Used in Investing Activities           (95.7)         (90.6)
                                           ------     ------ 
Financing Activities
 Accounts payable - banks                    (2.4)      (3.5)
                                           ------     ------ 
 Net Cash Flows Used in Financing Activities            (2.4)(3.5)
                                           ------     ------ 
Net Change in Cash
 Decrease in cash and cash equivalents                  (0.2)(0.2)
 Cash and cash equivalents, beginning of period          0.2  0.4 
                                           ------     ------ 
 Cash and Cash Equivalents, End of Period                            $  -      $  0.2 
                                           ======     ====== 
Supplemental Disclosures
 Cash paid for interest (net of amount capitalized)   $ 51.5         $ 32.7 
 Cash paid for income tax (including 
   intercompany amounts)                     58.2       70.4 
</TABLE>


        See accompanying notes to consolidated financial statements<PAGE>
<PAGE>
          Panhandle Eastern Pipe Line Company and Subsidiaries
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  General

    Panhandle Eastern Pipe Line Company (PEPL) and its subsidiaries (the
    Company), including Trunkline Gas Company (Trunkline), are involved in
    the interstate transportation and storage of natural gas.  PEPL is a
    wholly-owned subsidiary of PanEnergy Corp (PanEnergy).  The interstate
    gas transmission operations of PEPL and Trunkline are subject to the
    rules, regulations and accounting procedures of the Federal Energy
    Regulatory Commission (FERC).  

    The preparation of financial statements in conformity with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect certain reported amounts of assets and
    liabilities and disclosure of contingent liabilities at the date of the
    financial statements.  Certain amounts of reported revenues and expenses
    are also affected by these estimates and assumptions.  Actual results
    could differ from those estimates.  The consolidated financial
    statements reflect all normal recurring adjustments that are, in the
    opinion of management, necessary for fair presentation.  Certain amounts
    for the prior periods have been reclassified in the consolidated
    financial statements to conform to the current presentation.  

2.  Natural Gas Revenues and Regulatory Matters

    When rate cases are pending final FERC approval, a portion of the
    revenues collected by PEPL and Trunkline is subject to possible refunds. 
    The Company has established adequate reserves where required for such
    cases.  The following is a summary of significant pending rate cases
    before FERC and certain regulatory matters.  

    FERC Order 636

    During 1993, PEPL and Trunkline began providing restructured services
    pursuant to FERC Order 636.  This order requires pipeline service
    restructuring that unbundles sales, transportation and storage services. 
    Order 636 allows pipelines to recover eligible costs resulting from
    implementation of the order (transition costs).  On July 16, 1996, the
    U.S. Court of Appeals for the District of Columbia upheld, in general,
    all aspects of Order 636 and remanded certain issues for further
    explanation.  One of the issues remanded for further explanation is
    whether pipelines should be entitled to recover 100% of gas supply
    realignment (GSR) costs.  This matter is substantially mitigated by
    PEPL's Order 636 settlements with customers.

    In the past, during the normal course of business, PEPL and Trunkline
    entered into certain gas purchase contracts containing take-or-pay
    provisions, which exposed the Company to financial risk.  Trunkline is
    currently collecting certain take-or-pay settlement costs with respect
    to such contracts through volumetric surcharges with interest through
    1997 and intends to file after 1997 for recovery of amounts not fully
        recovered by these surcharges.  <PAGE>
<PAGE>
    In 1993, the U.S. Department of the Interior (the Department) announced
    its intention to seek additional royalties from gas producers as a
    result of payments received by such producers in connection with past
    take-or-pay settlements, and buyouts and buydowns of gas sales contracts
    with natural gas pipelines.  PEPL and Trunkline, with respect to certain
    producer contract settlements, may be contractually required to
    reimburse or, in some instances, to indemnify producers against such
    royalty claims.  The potential liability of the producers to the
    government and of the pipelines to the producers involves complex issues
    of law and fact which are likely to take a substantial period of time
    to resolve.  On August 27, 1996, the U.S. Court of Appeals for the
    District of Columbia Circuit overturned a lower court ruling in favor
    of the government in litigation brought on behalf of producers
    challenging the Department's attempts to seek the additional royalties.
    The Department is seeking further review of the appellate ruling.  If
    PEPL and Trunkline ultimately have to reimburse or indemnify the
    producers, they will file with FERC to recover a portion of these costs
    from pipeline customers. 

    The Company believes that Order 636 transition cost issues and
    take-or-pay settlement matters will not have a material adverse effect
    on future consolidated results of operations or financial position.  

    Jurisdictional Transportation and Sales Rates

    PEPL - On April 1, 1992 and November 1, 1992, PEPL placed into effect,
    subject to refund, general rate increases.  FERC issued an order on
    May 25, 1995 on the earlier rate proceeding and PEPL has requested
    rehearing of certain matters in that order.  On February 5, 1996, FERC
    issued an order on the latter rate proceeding and PEPL has also
    requested rehearing of various items in this order.  On September 12,
    1996, PEPL filed a settlement proposal relating to both rate proceedings
    on behalf of itself and the majority of its largest customers.  The
    settlement proposal is pending FERC review.  
 
    Trunkline - Effective August 1, 1996, Trunkline placed into effect,
    subject to refund, a general rate increase.  

3.  Gas Imbalances

    The consolidated balance sheet includes in-kind balances as a result of
    differences in gas volumes received and delivered.  At September 30,
    1996 and December 31, 1995, other current assets and other current
    liabilities included $30.3 million and $27.5 million (1996), and
    $11.1 million and $11.2 million (1995), respectively, for these
    imbalances.  

4.  Common Stockholder's Equity

    In July 1996, PEPL declared and paid a dividend on common stock of
    $100 million in the form of a promissory note due PanEnergy bearing
    interest at prime and maturing on December 31, 1996.  
<PAGE>
<PAGE>
5.  Other Contingency

    PEPL owns an effective 5.95% ownership interest in Northern Border
    Pipeline Company (Northern Border) through a master limited partnership. 
    Under the terms of a settlement related to a transportation agreement
    between PEPL and Northern Border, PEPL guarantees payment to Northern
    Border under a transportation agreement by an affiliate of Pan-Alberta
    Gas Limited.  The transportation agreement requires estimated total
    payments of $163 million for 1996 through 2001.  In the opinion of
    management, the probability that PEPL will be required to perform under
    this guarantee is remote.  

6.  Environmental Matters

    The Company has identified environmental contamination at certain sites
    on the PEPL and Trunkline systems and is undertaking cleanup programs
    at these sites.  The contamination resulted from the past use of
    lubricants containing PCBs (polychlorinated biphenyls) and the prior use
    of wastewater collection facilities and other on-site disposal areas. 
    Soil and sediment testing, to date, has detected no significant off-site
    contamination.  The Company has communicated with the Environmental
    Protection Agency and appropriate state regulatory agencies on these
    matters.  In August 1995, Trunkline entered into a consent order under
    a cleanup program with the Tennessee Department of Environment and
    Conservation for the cleanup of its Tennessee facility.  In June 1996,
    Trunkline entered into an agreement with the Indiana Department of
    Environmental Management for the cleanup of one of its Indiana
    facilities.  Cleanups in other states by PEPL and Trunkline are also
    proceeding.  The environmental cleanup programs are expected to continue
    until 2002.  

    The federal and state cleanup programs are not expected to interrupt or
    diminish the Company's ability to deliver natural gas to customers.  The
    Company believes the ultimate resolution of matters relating to the
    environmental issues discussed above will not have a material adverse
    effect on consolidated results of operations or financial position.  

7.  Litigation

    A lawsuit filed in the United States District Court for the District of
    Columbia by natural gas producer Jack Grynberg was served in July 1996
    naming PEPL, Trunkline and certain affiliated companies as defendants,
    among others.  The action was brought under the federal False Claims Act
    against 70 defendants, including every major pipeline, asserting that
    the defendants intentionally underreported volumes and heating content
    of gas purchased from producers on federal lands, with the result that
    the United States was underpaid royalties.  The plaintiff seeks recovery
    of the royalty amounts due the United States, treble damages, civil
    penalties and compliance with "appropriate" techniques for measuring
    gas.  The Company expects the resolution of this matter will not have
    a material adverse effect on consolidated results of operations or
    financial position.  
<PAGE>
<PAGE>
    The Company is also involved in various other legal actions and claims
    arising in the normal course of business.  Based upon its current
    assessment of the facts and the law, management does not believe that
    the outcome of any such action or claim will have a material adverse
    effect upon the consolidated financial position of the Company. 
    However, these actions  and claims in the aggregate seek substantial
    damages against the Company and are subject to the uncertainties
    inherent in any litigation.  The Company is defending itself vigorously
    in all the above suits.

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

The following information is provided to facilitate increased understanding
of the 1996 and 1995 interim consolidated financial statements and
accompanying notes presented in Item 1.  Because all of the outstanding
capital stock of PEPL is owned by PanEnergy, the following discussion has been
prepared in accordance with the reduced disclosure format permitted by
Form 10-Q for issuers that are wholly-owned subsidiaries of reporting
companies under the Securities Exchange Act of 1934. 

This quarterly report may contain certain forward-looking information
regarding the Company, including projections, estimates, forecasts, plans and
objectives.  Although management believes that all such statements are based
upon reasonable assumptions, no assurance can be given that the actual results
will not differ materially from those contained in such forward-looking
statements.  

Important factors that could cause actual results to differ include, but are
not limited to, general economic conditions, natural gas and liquids prices,
competition from other pipelines and alternative fuels, weather conditions,
state and federal regulation, legal and regulatory proceedings, the
development of new markets, services and products, and the condition of the
capital markets utilized by the Company.  

OPERATING ENVIRONMENT 

With implementation of Order 636 and the elimination of pipeline merchant
services, the Company's pipelines incurred certain costs related to the
transition.  PEPL's transition cost recoveries, which are subject to certain
challenges pending before FERC and the courts, will occur through 1999.  The
Company believes that Order 636 transition cost issues will not have a
material adverse effect on future consolidated results of operations,
financial position or liquidity. 

For information concerning certain other regulatory proceedings, environmental
matters and other contingencies, see Notes 2, 5, 6 and 7 of the Notes to
Consolidated Financial Statements.  
<PAGE>
<PAGE>
RESULTS OF OPERATIONS

Consolidated net income for the nine months ended September 30, 1996 was
$63.8 million compared with $68.5 million for the same period in 1995.  Total
natural gas transportation volumes for the Company increased 13% to
961 trillion British thermal units comparing the first nine months of 1996
with the same period of 1995, attributable mainly to colder-than-normal winter
temperatures.  

Earnings Before Interest and Tax

Consolidated earnings before interest and tax for the Company increased
$6 million to $149.2 million in the first nine months of 1996 compared with
the same period in 1995.  

PEPL - PEPL's earnings before interest and tax decreased $0.3 million
comparing the first nine months of 1996 with the prior-year period.  Higher
earnings in 1996 primarily from colder weather and lower net operating
expenses more than offset $9.5 million of severance expense recorded in the
first quarter 1996.  Also contributing to the decrease was a $2.9 million
reduction in equity earnings from Northern Border Partners, L.P. and a
$1.1 million net decrease related to regulatory settlements, which included
$11.4 million and $20.7 million recorded in the third quarters of 1996 and
1995, respectively.  

Trunkline - Earnings before interest and tax for Trunkline increased
$5.2 million comparing the first nine months of 1996 with the same period in
1995.  The net increase was due to higher throughput and transportation
revenues during the colder winter weather and lower expenses, which were
partially offset by the recognition of additional lease expense in the third
quarter 1996 and $5 million of severance expense in the first quarter 1996.

Interest Expense

Interest expense in the first nine months of 1996 increased $14.7 million
compared with the same period in 1995 as a result of higher average debt
balances outstanding.  

CAPITAL EXPENDITURES 

Capital expenditures totaled $32 million in the first nine months of 1996,
compared with $36.9 million for the same period in 1995.  Capital expenditures
for 1996 are expected to approximate $50 million, with the majority of
expenditures related to further enhancement of PEPL's and Trunkline's pipeline
integrity and reliability.  Expenditures for 1996 are expected to be funded
by cash from operations, periodic sales of trade receivables with limited
recourse and/or collection of intercompany amounts owed the Company.  The
Company's current estimate for 1997 capital expenditures is $40 million to
$50 million.  

DIVIDENDS

In July 1996, PEPL declared and paid a dividend on common stock of
$100 million in the form of a promissory note due PanEnergy bearing interest
at prime and maturing on December 31, 1996.  

<PAGE>
<PAGE>
                       PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

See Notes 2, 6 and 7 of the Notes to Consolidated Financial Statements in
Part I of this Report, which are incorporated herein by reference.  See also
Item 3 of PEPL's Annual Report on Form 10-K for the year ended December 31,
1995. 

Item 6.  Exhibits and Reports on Form 8-K

(a)    Exhibits -

    Exhibit Number            Description      
         27             Financial Data Schedule

(b) Reports on Form 8-K - None

<PAGE>
<PAGE>
                               SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned duly authorized officer and chief accounting officer.



                               PANHANDLE EASTERN PIPE LINE COMPANY 
                                          (Registrant)


                                      /s/ Sandra P. Meyer
                     
                               -----------------------------------
                                 Sandra P. Meyer, Vice President
                                   and Treasurer



Date:  November 12, 1996
0075rpt.cpz