PART I FINANCIAL INFORMATION

Item 1. Financial Statements

QUESTAR PIPELINE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

3 Months Ended

9 Months Ended

12 Months Ended

September 30,

September 30,

September 30,

2003

2002

2003

2002

2003

2002

(In Thousands)

REVENUES

$   37,881

$   36,332

$ 115,167

$ 103,053

$ 154,989

$  135,535

OPERATING EXPENSES

  Operating and maintenance

11,481

12,152

37,325

36,532

50,386

49,727

  Depreciation

6,595

5,841

19,301

15,497

25,953

18,819

  Other taxes

1,459

1,163

4,620

3,140

6,428

3,775

    TOTAL OPERATING EXPENSES

19,535

19,156

61,246

55,169

82,767

72,321

    OPERATING INCOME

18,346

17,176

53,921

47,884

72,222

63,214

INTEREST AND OTHER INCOME (EXPENSE)

(171)

(1,923)

53

312

256

2,317

INCOME FROM OPERATIONS OF

  UNCONSOLIDATED AFFILIATES

5,108

7,769

31

8,184

DEBT EXPENSE

(5,623)

(6,160)

(17,009)

(17,791)

(23,213)

(22,875)

  INCOME BEFORE INCOME TAXES

     AND CUMULATIVE EFFECT

12,552

14,201

36,965

38,174

49,296

50,840

INCOME TAXES

4,695

5,359

13,713

14,046

17,564

18,672

INCOME BEFORE CUMULATIVE EFFECT

7,857

8,842

23,252

24,128

31,732

32,168

Cumulative effect of accounting change

for asset retirement obligations, net of

income taxes of $78

(133)

(133)

         NET INCOME

$    7,857

$    8,842

$  23,119

$  24,128

$  31,599

$  32,168

See notes accompanying the consolidated financial statements

3

QUESTAR PIPELINE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30

December 31,

2003

2002

2002

(Unaudited)

(In Thousands)

ASSETS

Current assets

  Cash and cash equivalents

$    3,201

$    1,232

$    4,153

  Accounts receivable

6,136

8,781

9,780

  Federal income taxes recoverable

3,392

  Inventories - materials and supplies, at

       lower of average cost or market

1,809

2,046

2,153

  Prepaid expenses and other

434

346

3,287

    Total current assets

11,580

12,405

22,765

Property, plant and equipment

1,035,835

953,747

1,020,838

Less accumulated depreciation

332,438

263,909

316,433

    Net property, plant and equipment

703,397

689,838

704,405

Regulatory and other assets

16,943

18,643

19,384

Goodwill

4,058

4,058

Investment in unconsolidated affiliates

122,744

$  735,978

$  843,630

$  750,612

LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities

  Short-term debt

$  100,000

  Notes payable to Questar Corp.

$  41,700

72,700

$  74,800

  Accounts payable and accrued expenses

20,915

27,879

13,672

    Total current liabilities

62,615

200,579

88,472

Long-term debt

310,073

310,043

310,058

Deferred income taxes

104,495

80,759

95,920

Other liabilities

1,316

2,869

4,177

Common shareholder's equity

  Common stock

6,551

6,551

6,551

  Additional paid-in capital

142,034

142,034

142,034

  Retained earnings

108,894

100,795

103,400

    Total common shareholder's equity

257,479

249,380

251,985

$   735,978

$  843,630

$  750,612

See notes accompanying the consolidated financial statements

4

QUESTAR PIPELINE COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

9 Months Ended

September 30,

2003

2002

(In Thousands)

OPERATING ACTIVITIES

  Net income

$    23,119

$    24,128

    Adjustments to reconcile net income to net cash

      provided from operating activities:

    Depreciation

20,219

16,235

    Deferred income taxes

8,653

7,537

    Income from unconsolidated affiliates,

     net of cash distributions

2,003

    Net loss from selling assets

137

105

    Cumulative effect of accounting change

133

52,261

50,008

    Change in operating assets and liabilities

16,820

(738)

        NET CASH PROVIDED FROM OPERATING

          ACTIVITIES

69,081

49,270

INVESTING ACTIVITIES

  Capital expenditures

    Purchase of property, plant and equipment

(18,333)

(77,549)

    Investment in unconsolidated affiliates

(3,648)

      Total capital expenditures

(18,333)

(81,197)

    Cost of disposition of assets

(975)

(4,136)

      NET CASH USED IN INVESTING ACTIVITIES

(19,308)

(85,333)

FINANCING ACTIVITIES

  Change in notes payable to Questar Corp.

(33,100)

54,400

  Payment of dividends

(17,625)

(17,625)

      NET CASH PROVIDED FROM (USED IN)

        FINANCING ACTIVITIES

(50,725)

36,775

Change in cash and cash equivalents

(952)

712

Beginning cash and cash equivalents

4,153

520

Ending cash and cash equivalents

$      3,201

$     1,232

See notes accompanying the consolidated financial statements

5

QUESTAR PIPELINE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2003

(Unaudited)

Note 1 - Basis of Presentation of Interim Financial Statements

The accompanying consolidated financial statements of Questar Pipeline Company (Questar Pipeline or the Company), with the exception of the condensed consolidated balance sheet at December 31, 2002, have not been audited by independent public accountants. The interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three-, nine- and twelve-month periods ended September 30, 2003, are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. The straight fixed-variable rate design, which allows for recovery of substantially all fixed costs in the demand or reservation charges, reduces the earnings impact of weather conditions on gas transportation and storage operations. For further information refer to the financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2002 filed by Questar Pipeline.

Note 2 - Cumulative Effect of Accounting change - "Accounting for Asset Retirement Obligation"

On January 1, 2003, Questar Pipeline adopted Statement of Financial Accounting Standards 143 (SFAS 143) "Accounting for Asset Retirement Obligations." As a result, the Company recorded a $133,000 after tax charge for the cumulative effect of this accounting change and a $238,000 long-term asset retirement obligation. SFAS 143 addresses the financial accounting and reporting of the fair value of legal obligations associated with the retirement of tangible long-lived assets. The new standard requires the Company to estimate a fair value of abandonment costs and to capitalize and depreciate those costs over the life of the related assets. The provisions of SFAS 143 did not apply to a majority of the Company's long-lived assets due to lack of a legal obligation to abandon the assets or to an indeterminate abandonment date. The new accounting rules allow deferral of an obligation until the abandonment date is known.

The asset retirement obligation is adjusted to its present value each period through an accretion process using a credit-adjusted risk-free interest rate. Both the accretion expense associated with the liability and the depreciation associated with the capitalized abandonment costs are non-cash expenses until the asset is retired.

Note 3 - Reclassifications

Certain reclassifications were made to the 2002 financial statements to conform with the 2003 presentation.

6

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

QUESTAR PIPELINE COMPANY AND SUBSIDIARIES

September 30, 2003

(Unaudited)

Operating Results

Following is a summary of financial and operating information for the Company:

3 Months Ended

9 Months Ended

12 Months Ended

September 30,

September 30,

September 30,

2003

2002

2003

2002

2003

2002

FINANCIAL RESULTS - (In Thousands)

Revenues

  From unaffiliated customers

$  17,777

$  18,015

$  55,417

$  44,855

$  76,837

$  58,409

  From affiliates

20,104

18,317

59,750

58,198

78,152

77,126

    Total revenues

37,881

$  36,332

$ 115,167

$ 103,053

$ 154,989

$ 135,535

Operating income

$  18,346

$  17,176

$  53,921

$  47,884

$  72,222

$  63,214

Income before cumulative effect

$   7,857

$   8,842

$  23,252

$  24,128

$  31,732

$  32,168

Cumulative effect of accounting change

(133)

(133)

Net income

$   7,857

$   8,842

$  23,119

$  24,128

$  31,599

$  32,168

OPERATING STATISTICS

Natural gas transportation volumes (In

      Thousands of Decatherms)

    For unaffiliated customers

68,557

65,453

195,953

173,699

267,373

225,787

    For Questar Gas

13,412

14,704

79,132

91,971

98,853

123,495

    For other affiliated customers

6,786

1,228

15,989

2,525

19,508

5,431

      Total transportation

88,755

81,385

291,074

268,195

385,734

354,713

   Transportation revenue (per Dth)

$    0.25

$    0.30

$    0.25

$    0.25

$    0.26

$     0.25

Third Quarter Earnings

Questar Pipeline's third quarter earnings were $7.9 million in 2003 compared with $8.8 million in 2002. Lower construction activity in 2003 resulted in higher operating and maintenance costs due to reduced construction-related capitalized costs. Also, the TransColorado pipeline contributed to 2002 third quarter income before its sale in the fourth quarter.

Revenues

Revenues were higher in the 2003 periods compared with the 2002 periods due primarily to increased transportation capacity and contracted services. Total firm daily demand was 1,524,000 Dth in the first nine months of 2003 compared with 1,421,000 Dth in the first nine months of 2002. Higher volumes were primarily the result of the startup of the eastern

7

segment of the Questar Southern Trails pipeline mid-year 2002. The eastern segment of Southern Trails has a capacity of 80,000 Dth daily, which is fully-contracted through 2006. Beginning in May 2003, Questar Pipeline expanded its transportation service to the Kern River pipeline and deliveries subsequently increased by an average of 155,000 Dth per day. Gas transported on Overthrust pipeline accounted for about 55% of the increase.

Revenues in the 2003 periods also benefited from higher prices received for natural gas liquids removed from the transmission line, revenues from nonjurisdictional gas gathering and park and loan storage fees.

Expenses

Lower construction activity resulted in lower capitalization of costs and caused increased operating and maintenance expenses in a comparison of the year to date periods of 2003 and 2002. In addition, employee benefit costs, insurance and pipeline inspection costs are higher in the 2003 periods. The higher level of investment in pipeline projects of past years resulted in higher depreciation expenses and property taxes in the 2003 periods. Capitalized financing costs related to construction were significantly lower in 2003.

Other income, debt expense and income taxes

Interest and other income was lower in the 2003 periods due to less capitalization of financing costs resulting from reduced construction activity. The third quarter of 2003 includes a $300,000 pretax loss from selling assets. The third quarter of 2002 includes a $3 million charge to reduce an asset being sold to net realizable value. Earnings from unconsolidated affiliates included the Company's proportionate shares of the TransColorado pipeline and the Overthrust pipeline. In the fourth quarter of 2002, TransColorado was sold and the Ovethrust Pipeline became wholly owned. Lower debt balances and lower variable interest rates resulted in lower expenses in the three- and nine-months ended September 30, 2003 compared with the same period of 2002. The effective income tax rate for the first nine months was 37.1% and 36.8% in 2003 and 2002, respectively.

Cumulative Effect of Change in Accounting Method

On January 1, 2003, the Company adopted a new accounting rule, SFAS 143, "Accounting for Asset Retirement Obligations" and recorded a cumulative effect that reduced net income by $133,000. The ongoing accretion and depreciation expenses associated with SFAS 143 are insignificant.

Liquidity and Capital Resources

Operating Activities

Net cash provided from operating activities of $69.1 million in the first nine months of 2003 was $19.8 million more than the amount reported for the same period of 2002 due to timing differences, primarily in accounts payable and accrued expenses.

Investing Activities

Capital expenditures were $18.3 million in the first nine months of 2003, which was $62.9 million less than was reported in the corresponding period of 2002 because of the 2002 completion of pipeline projects. The capital expenditure forecast for 2003 is $40.6 million.

Financing Activities

In the first nine months of 2003 net cash flow provided from operating activities was used to fund capital expenditures, pay cash dividends and repay $33.1 million of debt. Forecasted capital expenditures for 2003 are expected to be financed with the proceeds from net cash provided from operating activities and debt from Questar.

OTHER INFORMATION

Western Segment of Questar Southern Trails Pipeline Company

Questar Pipeline has thus far been unsuccessful in its efforts to secure long-term contracts required to place the western segment of the Southern Trails pipeline into service. The western segment extends from the California-Arizona border to

8

Federal Energy Regulatory Commission (FERC) - Notice of Proposed Rulemaking (NOPR) on Affiliated Relations

FERC - NOPR on Quarterly Financial Reporting

FORWARD-LOOKING STATEMENT

This report includes "forward-looking statements" within the meaning of Section 27(A) of the Securities Act of 1933, as amended, and Section 21(E) of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the Company's future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "could," "expect," "intend," "project," "estimate," "anticipate," "believe," "forecast," or "continue" or the negative thereof or variations thereon or similar terminology. Although these statements are made in good faith and are reasonable representations of the Company's expected performance at the time, actual results may var y from management's stated expectations and projections due to a variety of factors.

Important assumptions and other significant factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements include:

       Weather and other natural phenomena;

       Lower credit ratings.

Item 4. Controls and Procedures

     a. Evaluation of Disclosure Controls and Procedures. The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company, including its consolidated subsidiaries, required to be included in the Company's reports filed or submitted under the Exchange Act.

     b. Changes in Internal Controls. Since the Evaluation Date, there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect such controls.

10