ANR PIPELINE CO, 10-K405, 1995-03-31

ANR PIPELINE CO
10-K405, 1995-03-31
NATURAL GAS TRANSMISSION

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(Mark One)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended DECEMBER 31, 1994 or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ____________________ to _____________________

Commission file number 1-7320

ANR PIPELINE COMPANY
(Exact name of registrant as specified in its charter)

DELAWARE 38-1281775
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

500 RENAISSANCE CENTER,
DETROIT, MICHIGAN 48243-1902
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (313) 496-0200

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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

Name of each exchange
Title of each class on which registered
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9-5/8% Debentures, due 2021 New York Stock Exchange
7-3/8% Debentures, due 2024

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

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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, and (2) has been subject to such filing
requirements for the past 90 days. Yes __[x]__ No _____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. __[x]__

As of March 15, 1995, there were outstanding 1,000 shares of common stock of
the Registrant, $100 par value per share, its only class of common stock. None
of the voting stock of the Registrant is held by nonaffiliates.

DOCUMENTS INCORPORATED BY REFERENCE: None

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TABLE OF CONTENTS

ITEM NO. PAGE
<S> <C> <C>
Glossary........................................... (ii)

PART I

1. Business........................................... 1
Introduction..................................... 1
Natural Gas System............................... 1
Operations..................................... 1
General...................................... 1
Transportation Services and Gas Sales........ 1
Gas Purchases................................ 2
Gas Storage.................................. 3
Competition.................................. 3
Producing Area Deliverability.................. 3
Regulations Affecting Gas System............... 4
General...................................... 4
Rate Matters................................. 4
Environmental.................................. 6
Other Developments............................. 6
2. Properties......................................... 7
3. Legal Proceedings.................................. 7
4. Submission of Matters to a Vote of Security Holders 8

PART II

5. Market for the Registrant's Common Equity and
Related Stockholder Matters....................... 9
6. Selected Financial Data............................ 9
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 9
8. Financial Statements and Supplementary Data........ 9
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............... 9

PART III

10. Directors and Executive Officers of the Registrant. 10
11. Executive Compensation............................. 11
12. Security Ownership of Certain Beneficial Owners
and Management.................................... 19
13. Certain Relationships and Related Transactions..... 22

PART IV

14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K................................ 24

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(i)
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GLOSSARY

"ANR" means American Natural Resources Company
"ANR Pipeline" or the "Company" means ANR Pipeline Company
"ANR Storage" means ANR Storage Company
"Bcf" means billion cubic feet
"Coastal" means The Coastal Corporation
"Coastal Natural Gas" means Coastal Natural Gas Company
"Colorado" means Colorado Interstate Gas Company
"Empire" means Empire State Pipeline
"EPA" means Environmental Protection Agency
"FAS" means Statement of Financial Accounting Standards
"FASB" means Financial Accounting Standards Board
"FERC" means Federal Energy Regulatory Commission
"HIOS" means High Island Offshore System

"Interim Settlement" means the Company's Stipulation and Agreement submitted to
the FERC which is more fully described in Item 1, "Business, Regulations
Affecting Gas System - Rate Matters"

"MMcf" means million cubic feet
"NGA" means Natural Gas Act of 1938, as amended
"NGPA" means Natural Gas Policy Act of 1978
"Order 636" means FERC Order No. 636 which is more fully described in Item 1,
"Business, Regulations Affecting Gas System - General"
"TransCanada" means TransCanada PipeLines Limited
"UTOS" means U-T Offshore System

NOTE: All natural gas volumes presented in this Annual Report are stated at a
pressure base of 14.73 pounds per square inch absolute and 60 degrees
Fahrenheit.

(ii)
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PART I

ITEM 1. BUSINESS.

INTRODUCTION

ANR Pipeline is a Delaware corporation organized in 1945. All of ANR
Pipeline's outstanding common stock is owned by ANR. ANR is a direct, wholly-
owned subsidiary of Coastal Natural Gas, and an indirect subsidiary of Coastal.
ANR Pipeline owns and operates an interstate natural gas pipeline system. At
December 31, 1994, the Company had 2,102 employees engaged in the operation of
ANR Pipeline and 144 employees engaged in the operation of HIOS, UTOS and
Empire.

NATURAL GAS SYSTEM

OPERATIONS

GENERAL

The Company is involved in the transportation, storage, gathering and
balancing of natural gas. ANR Pipeline provides these services for various
customers through its facilities located in Arkansas, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, New
Jersey, Ohio, Oklahoma, Tennessee, Texas, Wisconsin, Wyoming and offshore in
federal waters. Prior to November 1, 1993, the Company was also engaged in the
sale for resale of natural gas. With the Company's implementation of Order 636
effective November 1, 1993, ANR Pipeline no longer provides a merchant service.
However, former gas sales customers of ANR Pipeline have largely retained their
firm storage and transportation service levels previously included in their
"bundled" gas sales services. The Company auctions gas on the open market in
producing areas to handle a residual quantity of gas purchased under certain
continuing gas purchase contracts pending renegotiation or expiration of such
contracts. The Company operates two offshore gas pipeline systems in the Gulf of
Mexico which are owned by HIOS and UTOS, general partnerships composed of ANR
Pipeline subsidiaries and subsidiaries of other pipeline companies. The Company
also operates Empire, an intrastate pipeline extending from Niagara Falls to
Syracuse, New York, in which an affiliate of the Company has a 45% interest.

The Company's two interconnected, large-diameter multiple pipeline systems
transport gas to the Midwest from (a) the Hugoton Field and other fields in the
Anadarko Basin in Texas and Oklahoma and (b) the Louisiana onshore and Louisiana
and Texas offshore areas. The Company's principal pipeline facilities at
December 31, 1994 consisted of 12,661 miles of pipeline and 96 compressor
stations with 1,069,398 installed horsepower. At December 31, 1994, the design
peak day delivery capacity of the transmission system, considering supply
sources, storage, markets and transportation for others, was approximately 5.6
Bcf per day.

TRANSPORTATION SERVICES AND GAS SALES

On November 1, 1992, as part of its Interim Settlement, ANR Pipeline
implemented a restructuring of its traditional sales services by replacing
existing services with a combination of competitive service alternatives. This
restructuring provided a number of options for pipeline customers and was
designed to enhance competition in ANR Pipeline's service areas. Under this
restructuring, the sales service was "unbundled" on an interim basis into firm
sales, transportation, flexible storage and flexible delivery services. Prior to
the restructuring, the cost of providing transportation services for sales
customers was recovered as part of ANR Pipeline's total resale rate and
therefore, was classified as part of gas sales revenue. Under the restructuring,
these costs were recovered through a separate rate and were included in
transportation revenue. Additional information concerning the restructuring is
set forth in "Regulations Affecting Gas System - Rate Matters" included herein.

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Effective November 1, 1993, the Company implemented Order 636. This Order
required significant changes in the services provided by ANR Pipeline and
resulted in the elimination of the Company's merchant service. The Company now
offers an array of "unbundled" transportation, storage and balancing service
options. Additional information concerning Order 636, including transportation
and storage, is set forth in "Regulations Affecting Gas System - General"
included herein.

ANR Pipeline transports gas to markets on its system and also transports gas
to other markets off its system under transportation and exchange arrangements
with other companies, including distributors, intrastate and interstate
pipelines, producers, brokers, marketers and end-users. Transportation service
revenues amounted to $555 million for 1994 compared to $533 million for 1993 and
$463 million for 1992. The significant increase in transportation revenues for
1993 was largely attributable to the restructuring of the Company's sales
service under the Interim Settlement, as discussed above.

Gas sales revenues of ANR Pipeline amounted to $106 million during 1994,
compared to $604 million in 1993 and $635 million in 1992. The significant
decrease in 1994 is due to the elimination of the Company's merchant function
effective November 1, 1993, as discussed above. Gas sales revenues in 1994 were
derived primarily from the auctioning of gas on the open market in producing
areas, as previously discussed.

During 1994, ANR Pipeline's throughput was 1,371 Bcf, of which approximately
24% was transported for its three largest customers: Michigan Consolidated Gas
Company, Wisconsin Gas Company and Wisconsin Natural Gas Company. Michigan
Consolidated Gas Company serves the city of Detroit and certain surrounding
areas, the cities of Grand Rapids and Muskegon, the communities of Ann Arbor and
Ypsilanti and numerous other communities in Michigan. Wisconsin Gas Company
serves the Milwaukee metropolitan area and numerous other communities in
Wisconsin. Wisconsin Natural Gas Company serves the cities of Racine, Kenosha,
Appleton and their surrounding areas in Wisconsin. In 1994, ANR Pipeline
provided approximately 70% and 35% of the total gas requirements for Wisconsin
and Michigan, respectively.

ANR Pipeline's system deliveries for the years 1994, 1993 and 1992 are as
follows:

Total System Daily Average
Year Deliveries System Deliveries
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(Bcf) (MMcf)
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1994 1,371 3,756
1993 1,336 3,660
1992 1,335 3,648

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GAS PURCHASES

Effective November 1, 1993, as a result of the elimination of ANR Pipeline's
merchant service, as mentioned above, the Company's gas purchases decreased
substantially. However, the Company still purchases a residual quantity of gas
under certain remaining gas purchase contracts. The Company's Order 636
restructured tariff provides a transitional mechanism for the purpose of
recovering from, or refunding to, its customers any pricing differential between
costs incurred to purchase this gas and the amount the Company recovers through
the auctioning of such gas on the open market in producing areas.

Some of ANR Pipeline's remaining gas purchase contracts with independent
producers contain provisions which require taking minimum volumes and/or making
prepayments for volumes not taken if purchases fall below specified levels
during the contract year ("take-or-pay"). Additional information on take-or-pay
matters is set forth in Note 6 of Notes to Consolidated Financial Statements
included herein.

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GAS STORAGE

ANR Pipeline owns seven and leases eight underground storage facilities in
Michigan. The total working storage capacity of the system is approximately 193
Bcf, with a maximum day delivery capacity of 2 Bcf as late as the end of
February. However, of the 193 Bcf, the Company has reclassified 62.1 Bcf of
working gas to recoverable base gas, which is pending approval before the FERC.
The Company also has the contract rights for 42 Bcf of storage capacity provided
by Blue Lake Gas Storage Company and 30 Bcf of storage capacity provided by ANR
Storage. Underground storage services of up to 180 Bcf of gas are provided by
the Company to customers on a firm basis. The Company also provides
interruptible storage services for customers on a short-term basis.

Coastal's independent engineers, Huddleston & Co., Inc., have estimated that
the Company's gas storage reserves as of December 31, 1994, 1993 and 1992 were
113.8 Bcf, 106.5 Bcf and 128.0 Bcf, respectively. The 1994 gas storage reserves
are comprised of 23.4 Bcf of natural gas, maintained under the Company's own
account as working gas for system balancing and no-notice services and 90.4 Bcf
of recoverable base gas reserves. Of the total recoverable base gas reserves,
28.3 Bcf represents reserves in the seven-owned and eight-leased storage fields
and 62.1 Bcf represents working gas which the Company has reclassified as
recoverable base gas.

COMPETITION

ANR Pipeline has historically competed with interstate pipeline companies in
the sale, transportation and storage of gas and with independent producers,
brokers, marketers and other pipelines in the gathering and sale of gas within
its service areas. On November 1, 1993, the Company implemented Order 636 on its
system. As a consequence, the Company is no longer a seller of natural gas to
resale customers. Order 636 also mandated implementation of capacity release and
secondary delivery point options allowing a pipeline's firm transportation
customers to compete with the pipeline for interruptible transportation.

Natural gas competes with other forms of energy available to customers,
primarily on the basis of price. These competitive forms of energy include
electricity, coal, propane and fuel oils. Changes in the availability or price
of natural gas or other forms of energy, as well as changes in business
conditions, conservation, legislation or governmental regulations, capability to
convert to alternate fuels, changes in rate structure, taxes and other factors
may affect the demand for natural gas in the areas served by ANR Pipeline.

ANR Pipeline's transportation, storage and balancing services are influenced
by its customers' access to alternative providers of such services. The Company
competes directly with Panhandle Eastern Pipe Line Company, Trunkline Gas
Company, Northern Natural Gas Company, Natural Gas Pipeline Company of America,
Michigan Consolidated Gas Company and CMS Energy Company in its principal market
areas of Michigan and Wisconsin for its transportation, storage and balancing
business. The Company's gathering services, which are offered in the southeast
and southwest gas producing areas of the United States, compete with other
providers of such services, including gathering companies, producers and
intrastate and interstate pipeline companies.

PRODUCING AREA DELIVERABILITY

Shippers on ANR Pipeline have direct access to the two most prolific gas
producing areas in the United States, the Gulf Coast and the Midcontinent.
Statistics published by the Energy Information Agency, Office of Oil and Gas, U.
S. Department of Energy, indicate that approximately 81% of all natural gas in
the lower 48 states is produced from these two areas. Interconnecting pipelines
provide shippers with access to all other major gas producing areas in the
United States and Canada.

Gas deliverability available to shippers on ANR Pipeline's system from the
Midcontinent and Gulf Coast producing areas through direct connections and
interconnecting pipelines and gatherers is approximately 4,200 MMcf per day. An
additional 250 MMcf per day of deliverability is accessible to shippers on
Company-owned, or partially-owned, pipeline segments not directly connected to a
Company mainline.

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The Company remains active in locating and connecting new sources of natural
gas to facilitate transportation arrangements made by third-party shippers.
During 1994, field development, newly connected gas wells, gas production
facilities and pipeline interconnections contributed over 1,100 MMcf per day to
total deliverability accessible to shippers on the Company's pipeline system.

REGULATIONS AFFECTING GAS SYSTEM

GENERAL

Under the NGA, the FERC has jurisdiction over ANR Pipeline as to sales,
transportation, storage, gathering and balancing of gas, rates and charges,
construction of new facilities, extension or abandonment of service and
facilities, accounts and records, depreciation and amortization policies and
certain other matters. ANR Pipeline, where required, holds certificates of
public convenience and necessity issued by the FERC covering its jurisdictional
facilities, activities and services.

ANR Pipeline is also subject to regulation with respect to safety
requirements in the design, construction, operation and maintenance of its
interstate gas transmission and storage facilities by the Department of
Transportation. Operations on United States government land are regulated by the
Department of the Interior.

On November 1, 1990, the FERC issued Order No. 528 in which it sets forth
guidelines for an acceptable allocation method for a fixed direct charge to
collect take-or-pay settlement costs. Pursuant to Order No. 528, the Company has
filed for and received approval to recover 75% of expenditures associated with
resolving producer claims and renegotiating gas purchase contracts. The approved
filings provide for recovery of 25% of such expenditures via a direct bill to
the Company's former sales for resale customers and 50% via a surcharge on all
transportation volumes. Contract reformation and take-or-pay costs incurred as a
result of the mandated Order 636 restructuring will be recovered under the
transition cost mechanisms of Order 636, as well as through negotiated
agreements with the Company's customers.

On April 8, 1992, the FERC issued Order 636, which required significant
changes in the services provided by interstate natural gas pipelines. The
Company and numerous other parties have sought judicial review of aspects of
Order 636. The case is currently in the briefing phase before the United States
Court of Appeals for the D.C. Circuit. ANR Pipeline placed its restructured
services under Order 636 into effect on November 1, 1993. As a result, the
Company no longer provides a merchant service and now offers a wide range of
"unbundled" transportation, storage and balancing services. However, the Company
still purchases a residual quantity of gas under certain remaining gas purchase
contracts. The Company's Order 636 restructured tariff provides a transitional
mechanism for the purpose of recovering from, or refunding, to its customers any
pricing differential between costs incurred to purchase this gas and the amount
the Company recovers through the auctioning of such gas on the open market in
producing areas. Several persons, including ANR Pipeline, have sought judicial
review of aspects of the FERC's orders approving the Company's restructuring
filings. Those appeals have been held in abeyance by the United States Court of
Appeals for the D.C. Circuit, pending further order. On March 24, 1994, the FERC
issued its "Fourth Order on Compliance Filing and Third Order on Rehearing,"
which addressed numerous rehearing issues and confirmed that after minor
required tariff modifications, the Company is now fully in compliance with Order
636 and the requirements of the orders on ANR Pipeline's restructuring filings.
The FERC issued a further order regarding certain compliance issues on July 1,
1994. In accordance with this order, the Company filed revised tariff sheets on
July 18, 1994.

RATE MATTERS

All of the Company's service options are subject to rate regulation by the
FERC. Under the NGA, ANR Pipeline must file with the FERC to establish or adjust
its service rates. The FERC may also initiate proceedings to determine whether
the Company's rates are "just and reasonable."

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On March 10, 1992, the Company submitted to the FERC a comprehensive Interim
Settlement designed to resolve all outstanding issues resulting from its 1989
rate case and its 1990 proposed service restructuring proceeding. The Interim
Settlement became effective November 1, 1992 and expired with the Company's
implementation of Order 636 on November 1, 1993. Under the Interim Settlement,
gas inventory demand charges were collected from the Company's resale customers
for the period November 1, 1992 through October 31, 1993. This method of gas
cost recovery required refunds for any over-collections, and placed the Company
at risk for under-collections. As required by the Interim Settlement, the
Company filed with the FERC on April 29, 1994, a reconciliation report showing
over-collections and, therefore, proposed refunds totaling $45.1 million. Such
refund obligations were recorded at December 31, 1994 and December 31, 1993, and
are included in the Consolidated Balance Sheet under "Deferred Credits and
Other." Certain customers have disputed the level of those refunds. By an order
issued in February 1995, the FERC has directed the Company to make immediate
refunds of $45.1 million and applicable interest, subject to further
investigation of the claims which the customers have made. The matter is still
pending.

On November 1, 1993, the Company filed a general rate increase with the FERC
under Docket No. RP94-43. The increase represents the effects of higher plant
investment, Order 636 restructuring costs, rate of return and tax rate changes,
and increased costs related to the required adoption of recent accounting rule
changes, i.e., FAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" ("FAS No. 106") and FAS No. 112, "Employers' Accounting for
Postemployment Benefits" ("FAS No. 112"). On March 23, 1994, the FERC issued an
order granting and denying various requests for summary disposition and
establishing hearing procedures for issues remaining to be investigated in this
proceeding. The order required the reduction or elimination of certain costs
which resulted in revised rates such that the revised rates reflect an $85.7
million increase in the cost of service from that approved in the Interim
Settlement and a $182.8 million increase over the Company's approved rates for
its restructured services under Order 636. On April 29, 1994, the Company filed
a motion with the FERC that placed the new rates into effect May 1, 1994,
subject to refund. On September 21, 1994, the FERC accepted the Company's filing
in compliance with the March 23, 1994 order, subject to further modifications
including an additional reduction in cost of service of approximately $5
million. The Company submitted its compliance filing to the FERC on October 6,
1994, which compliance filing was accepted by order issued December 8, 1994,
subject to a further compliance filing requirement, which ANR Pipeline submitted
on January 9, 1995, and which was accepted by an order issued in February 1995.
Further, on December 8, 1994, the FERC issued its order denying rehearing of the
March 23, 1994 order. On January 26, 1995, ANR Pipeline sought judicial review
of these orders before the United States Court of Appeals for the D.C. Circuit.

ANR Pipeline has executed a Settlement Agreement (the "Settlement Agreement")
with Dakota Gasification Company ("Dakota") and the Department of Energy which
resolves litigation concerning purchases of synthetic gas by the Company from
the Great Plains Coal Gasification Plant (the "Plant"). That litigation,
originally filed in 1990 in the United States District Court in North Dakota,
involved claims regarding the Company's obligations under certain gas purchase
and transportation contracts with the Plant. The Settlement Agreement resolves
all disputes between the parties, amends the gas purchase agreement between the
Company and Dakota and terminates the transportation contract. The Settlement
Agreement is subject to final FERC approval, including an approval for the
Company to recover the settlement costs from its customers. On August 3, 1994,
the Company filed a petition with the FERC requesting: (a) that the Settlement
Agreement be approved; (b) an order approving ANR Pipeline's proposed tariff
mechanism for the recovery of the costs incurred to implement the Settlement
Agreement; and (c) an order dismissing a proceeding currently pending before the
FERC, wherein certain of ANR Pipeline's customers have challenged Dakota's
pricing under the original gas supply contract. On October 18, 1994, the FERC
issued an order consolidating the Company's petition with similar petitions of
three other pipeline companies and setting the Settlement Agreement and other
Dakota-related proceedings for limited hearing before an Administrative Law
Judge who must render an initial decision by December 31, 1995. On December 20,
1994, ANR Pipeline filed its testimony, and has responded to numerous discovery
requests. The hearing is scheduled to commence on June 20, 1995. The Company
believes the ultimate resolution of the Dakota related issues will not have a
material adverse impact on its consolidated financial position or results of
operations.

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Order 636 provides mechanisms for recovery of transition costs associated
with compliance with that Order. The Company has estimated that its transition
costs will amount to approximately $150 million, which will consist primarily of
gas supply realignment costs, the cost of stranded pipeline investment and the
Dakota costs described above. As of December 31, 1994, the Company has incurred
transition costs in the amount of $43 million. The Company has filed for
recovery of approximately $40.5 million of these transition costs, which have
been accepted and made effective by the FERC, subject to refund and subject to
further proceedings. In addition, the Company has filed for recovery of
approximately $90 million of costs associated with the Settlement Agreement, as
mentioned above. Additional transition cost filings will be made by the Company
in the future. As a result of the recovery mechanisms provided under Order 636,
the Company anticipates that these transition costs will not have a material
adverse effect on its consolidated financial position or results of operations.

Certain regulatory issues remain unresolved among the Company, its customers,
its suppliers and the FERC. The Company has made provisions which represent
management's assessment of the ultimate resolution of these issues. While the
Company estimates the provisions to be adequate to cover potential adverse
rulings on these and other issues, it cannot estimate when each of these issues
will be resolved.

ENVIRONMENTAL

A subsidiary of the Company owns a 9.4% interest in Iroquois Gas Transmission
System, L.P. ("Iroquois"), a 370-mile pipeline which transports gas from Canada
to the northeastern United States (the "Iroquois Pipeline"). Iroquois contracted
with Iroquois Pipeline Operating Company ("IPOC") for IPOC to construct and
operate the Iroquois Pipeline. Federal and state agencies (including the United
States Attorney's office for the Northern District of New York) have been
investigating alleged civil and criminal violations of environmental laws
related to the construction and operation of the Iroquois Pipeline by IPOC. It
is possible that this investigation could result in monetary sanctions, of which
its subsidiary's share, while not material to the Company, could exceed
$100,000.

Information concerning other environmental matters is set forth in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 7 of Notes to Consolidated Financial Statements included
herein.

OTHER DEVELOPMENTS

Effective September 9, 1994, Florida Power Corporation ("FPC") withdrew as an
equity partner in both the SunShine Interstate Transmission Company and SunShine
Pipeline Company ("SunShine") partnerships. Interests in these partnerships are
now held by affiliates of the Company and TransCanada. FPC has also terminated
its agreements with the partnerships to transport gas on the proposed SunShine
system effective March 2, 1995. Future development of the SunShine project is
currently under management review. SunShine has obtained a delay on proceedings
pending before the Florida Department of Environmental Protection until October
1995 and on February 24, 1995, requested that FERC allow ninety days for
SunShine to report the results of its review.

Sponsors of the Liberty Pipeline Project ("Liberty") asked the FERC, on
August 1, 1994, to postpone indefinitely its review of the project following the
withdrawal in early June of one key shipper who was also a project partner and
the withdrawal of another shipper. As a result, the FERC dismissed the
application on August 12, 1994. As originally proposed, Liberty consisted of a
38-mile pipeline extending from New Jersey across New York Harbor to Long Island
with a potential capacity of 500 MMcf per day and was estimated to cost $170
million. A subsidiary of the Company holds a 25.9% interest in the project. The
Liberty partners continue to believe that an additional delivery point onto Long
Island, as proposed by Liberty, will be necessary in the future and plan to
continue pursuing that goal.

The Company has filed an application with the FERC to construct, at a cost of
$15.3 million, approximately 12 miles of new pipeline in the State of Michigan
(the "Link Project") which would interconnect to approximately 8 miles of new
pipeline to be constructed by The Consumers' Gas Company, Ltd. ("Consumers") at
the Canadian-

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United States border. The Link Project is an amendment to the Company's earlier
application to construct the InterCoastal Pipe Line, which was denied approval
by the Canadian National Energy Board. The new facilities will have a capacity
of 150 MMcf per day and will serve markets in the United States and Canada,
including Consumers and Michigan Consolidated Gas Company. Consumers is
expected to file for the necessary Canadian regulatory approvals by the end of
March 1995, and, subject to the receipt of the necessary FERC and Canadian
regulatory approvals, the project could be in service as early as November 1,
1995.

A subsidiary of the Company has a 45% equity interest in the proposed
Mayflower Pipeline project, which will be owned by a partnership consisting of
the Company's subsidiary and affiliates of TransCanada and Brooklyn Union Gas
Company. The project is proposed to provide natural gas transportation and
storage services to markets in the northeastern United States. The proposed 240-
mile pipeline will extend east from the Iroquois Gas Transmission System at
Canajoharie, New York to a location near Boston, Massachusetts, and have an
initial design capacity of 350 MMcf per day. The total project cost is expected
to be $540 million. The project could be in service by late 1999, subject to the
receipt of federal regulatory approvals of its construction.

In August 1993, the Company and NorAm Energy Corporation, formerly Arkla,
Inc. ("NorAm") announced execution of a restructured agreement under which the
Company, subject to certain conditions precedent, would purchase an ownership
interest in 250 MMcf per day of capacity in existing gas transmission
facilities. On March 25, 1994, the FERC issued an order approving this
acquisition, subject to certain conditions. NorAm and ANR Pipeline have filed
for judicial review of this order and FERC's Order on Rehearing issued September
20, 1994.

Funding for certain pending and proposed natural gas pipeline projects is
anticipated to be provided through non-recourse financings in which the
projects' assets and contracts will be pledged as collateral. This type of
financing typically requires the participants to make equity investments
totaling approximately 20% to 30% of the cost of the project, with the remainder
financed on a long-term basis.

ITEM 2. PROPERTIES.

Information on properties of ANR Pipeline is in Item 1, "Business," included
herein.

The real property owned by the Company in fee consists principally of sites
for compressor and metering stations and microwave and terminal facilities. With
respect to the seven-owned storage fields, the Company holds title to gas
storage rights representing ownership of, or has long-term leases on, various
subsurface strata and surface rights and also holds certain additional gas
rights. Under the NGA, the Company may acquire by the exercise of the right of
eminent domain, through proceedings in United States District Courts or in state
courts, necessary rights-of-way to construct, operate and maintain pipelines and
necessary land or other property for compressor and other stations and equipment
necessary to the operation of pipelines.

All of the principal properties of the Company were subject to the lien of
its Mortgage and Deed of Trust dated as of September 1, 1948, securing its First
Mortgage Pipe Line Bonds, and some of such properties were subject to "permitted
liens" as defined in such Mortgage and Deed of Trust. The First Mortgage Pipe
Line Bonds were retired in 1993 and the associated Mortgage and Deed of Trust
was terminated in 1994.

ITEM 3. LEGAL PROCEEDINGS.

Numerous lawsuits and other proceedings which have arisen in the ordinary
course of business are pending or threatened against the Company or its
subsidiaries. Although no assurances can be given and no determination can be
made at this time as to the outcome of any particular lawsuit or proceeding, the
Company believes there are meritorious defenses to substantially all such claims
and that any liability which may finally be determined should not have a
material adverse effect on the Company's consolidated financial position or
results of operations. Additional information regarding legal proceedings is set
forth in Notes 6 and 7 of Notes to Consolidated Financial Statements included
herein.

7
<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

8
<PAGE>

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

All common stock of ANR Pipeline is owned by ANR.

Under the terms of the most restrictive of the Company's financing
agreements, approximately $166 million was available at December 31, 1994 for
payment of dividends on the Company's common stock.

ITEM 6. SELECTED FINANCIAL DATA.

The following selected financial data (in millions of dollars) for the
periods indicated is derived from the Consolidated Financial Statements included
herein and Item 6 of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, as adjusted for minor reclassifications. The Notes
to Consolidated Financial Statements included herein contain information
relating to this data.

<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Storage and transportation.......... $ 706.3 $ 634.7 $ 534.0 $ 441.4 $ 366.5
Gas sales........................... 106.1 603.5 634.5 641.2 628.5
Other............................... 29.7 33.6 23.3 31.8 81.8
-------- -------- -------- -------- --------
Total.............................. $ 842.1 $1,271.8 $1,191.8 $1,114.4 $1,076.8
======== ======== ======== ======== ========
Net Earnings........................... $ 152.1 $ 157.0 $ 151.0 $ 148.4 $ 148.1
======== ======== ======== ======== ========
Dividends Declared on Common Stock..... $ 331.0 $ 33.7 $ 28.6 $ 320.0 $ 46.9
======== ======== ======== ======== ========
Total Assets........................... $1,858.6 $1,920.3 $1,968.0 $1,905.1 $2,056.0
======== ======== ======== ======== ========
Capital Structure:
Common stock and other stockholder's
equity.............................. $ 788.5 $ 969.3 $ 850.1 $ 732.8 $ 910.8
Mandatory redemption cumulative
preferred stock..................... - 26.0 36.1 48.3 61.2
Long-term debt and capital lease
obligations......................... 437.0 374.0 435.1 482.6 436.8
-------- -------- -------- -------- --------
Total.............................. $1,225.5 $1,369.3 $1,321.3 $1,263.7 $1,408.8
======== ======== ======== ======== ========
</TABLE>

Since all of the outstanding common stock of ANR Pipeline is owned by ANR,
earnings and cash dividends per common share have no significance and are not
presented.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The Management's Discussion and Analysis of Financial Condition and Results
of Operations is presented on pages F-1 through F-5 herein.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Financial Statements and Supplementary Data required hereunder are
included in this Annual Report as set forth in Item 14(a) herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

9
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The directors and executive officers of ANR Pipeline as of March 15, 1995,
were as follows:

NAME (AGE), YEAR FIRST ELECTED
DIRECTOR AND/OR OFFICER POSITIONS AND OFFICES WITH THE REGISTRANT
- ------------------------------ -----------------------------------------
<S> <C>
James F. Cordes (54), 1982 Chairman of the Board of Directors
Jeffrey A. Connelly (48), 1988 President, Chief Executive Officer
and 1983 and Director
David A. Arledge (50), 1994 Director
John M. Bissell (64), 1994 Director
Harold Burrow (80), 1994 Vice Chairman of the Board of Directors
Roy D. Chapin, Jr. (79), 1994 Director
Lawrence P. Doss (67), 1994 Director
Martha O. Hesse (52), 1994 Director
Richard A. Lietz (49), 1994 and 1984 Executive Vice President, Chief
Operating Officer and Director
Wilber H. Mack (84), 1994 Director
J. Carleton MacNeil, Jr. (60), 1994 Director
James H. McNeal, Jr. (67), 1994 Director
O. S. Wyatt, Jr. (70), 1994 Director
Daniel F. Collins (53), 1986 Senior Vice President
Donald H. Gullquist (51), 1994 Senior Vice President
Coby C. Hesse (47), 1994 Senior Vice President
Wilbur A. Hitchcock (46), 1994 Senior Vice President
Rebecca H. Noecker (43), 1989 Senior Vice President and General Counsel
Austin M. O'Toole (59), 1985 Senior Vice President and Assistant
Secretary
Scott P. Anger (50), 1990 Vice President
Stanley A. Babiuk (43), 1989 Vice President
T. E. Jackson, Jr. (55), 1994 Vice President
William L. Johnson (37), 1991 Vice President and Controller
John D. Kobasa (54), 1988 Vice President
Richard H. Leehr (45), 1991 Vice President
Michael B. Lobin (45), 1991 Vice President
John P. Lucido (47), 1988 Vice President
Lawrence R. Marantette (45), 1992 Vice President
Michael E. Maslyn (54), 1986 Vice President
Ronald D. Matthews (47), 1994 Vice President and Treasurer
Lynn M. Nichols (48), 1995 Vice President
Dennis J. Paruch (49), 1984 Vice President
Elias A. Shaptini (64), 1981 Vice President
C. D. Wilkerson (61), 1987 Vice President
Frederick H. Clark (66), 1984 Secretary

</TABLE>

The above named persons bear no family relationship to each other. Their
respective terms of office expire coincident with ANR Pipeline's Annual Meeting
of the Sole Stockholder and Annual Meeting of the Board of Directors to be held
in May 1995. Each of the directors and officers named above have been officers
or employees of ANR Pipeline, Colorado and/or Coastal for five years or more
except for the following:

10
<PAGE>

Mr. Bissell was elected a Director in September 1994. He has been a Director
of Coastal since 1985 and of ANR since 1979. He is currently Chairman of the
Board of Directors and Chief Executive Officer of Bissell Inc., a position he
has held since 1971.

Mr. Burrow was elected Vice Chairman of the Board of Directors in September
1994. He has served as a Director of Coastal since 1973 and as Chairman of the
Board of Directors of Colorado since 1974.

Mr. Chapin was elected a Director in September 1994. He has been a Director
of Coastal since 1988 and of ANR since 1973. Mr. Chapin was Chairman and Chief
Executive Officer of American Motors Corporation from 1967 until his retirement
in 1978.

Mr. Doss was elected a Director in September 1994. He has been a Director of
ANR since 1980. He is a former partner of Coopers & Lybrand, an international
accounting and consulting firm.

Ms. Hesse was elected a Director in September 1994. Ms. Hesse is currently
President of Hesse Gas Company, a position she has held since 1991. Prior
thereto she served as Senior Vice President of First Chicago Corporation since
1990. She was Chairman of the Federal Energy Regulatory Commission from 1986 to
1989. She has been a Director of ANR since 1990.

Mr. Mack was elected a Director in September 1994. Mr. Mack was an executive
with ANR for 24 years, retiring in 1976 as Chairman and Chief Executive Officer
and serving on the Board until 1982. He was re-elected to the Board of ANR in
1986.

Mr. MacNeil was elected a Director in September 1994. He has been a Director
of ANR since 1993. Mr. MacNeil has been self employed in the securities and
brokerage industry since 1980.

Mr. McNeal was elected a Director in September 1994. He has been a Director
of ANR since 1982. Mr. McNeal served in various capacities with The Budd
Company, retiring in 1989 as Chairman and Chief Executive Officer.

Mr. Matthews was elected Vice President and Treasurer in September 1994. He
was elected Vice President and Treasurer of Colorado in October 1994. He has
held various positions in financial management with Coastal and its affiliates
since 1983, and was elected Treasurer of Coastal in September 1994.

Ms. Nichols was elected Vice President in January 1995. Most recently she
served as Director - Application and Maintenance for Whirlpool Corporation,
where she worked for more than four years. Prior thereto, she served in various
capacities for the Pillsbury Corporation for 21 years.

ITEM 11. EXECUTIVE COMPENSATION.

ANR Pipeline is an indirect, wholly-owned subsidiary of Coastal. Information
concerning the cash compensation and certain other compensation of the directors
and officers of Coastal is contained in this section.

The following table sets forth information for the fiscal years ended
December 31, 1994, 1993 and 1992 as to cash compensation paid by Coastal and its
subsidiaries, as well as certain other compensation paid or accrued for those
years, to Coastal's Chief Executive Officer ("CEO") and its four other most
highly compensated executive officers (the "Named Executive Officers").

11
<PAGE>

SUMMARY COMPENSATION TABLE

Long Term Compensation
----------------------
Annual Compensation/(1)/ Awards Payouts
------------------------------------- ------------- -------
Securities All Other
Underlying LTIP Compen-
Name and Options/ Payouts sation
Principal Position Year Salary($)/(2)/ Bonus($)/(4)/ SARs(#)/(5)/ ($) $/(6)/
- ---------------------------- ---- --------------- -------------- ------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
O. S. Wyatt, Jr., 1994 849,093 200,000 -0- -0- 67,928
Chairman of the Board 1993 962,495 90,000 -0- 71,690
and CEO 1992 1,038,178/(3)/ -0- -0- 75,974

David A. Arledge, 1994 553,873 150,000 -0- -0- 44,310
President, Chief 1993 473,211 70,000 38,848 42,042
Operating Officer and Director 1992 469,858/(3)/ 60,000 35,000 48,794

James F. Cordes, 1994 592,223 130,000 -0- -0- 47,378
Executive V.P. 1993 624,675 50,000 32,094 48,414
and Director 1992 596,221/(3)/ 60,000 25,000 48,118

James A. King, 1994 343,823 75,000 -0- -0- 6,877
Executive V.P. 1993 324,658 28,000 20,000 3,254
1992 208,038/(3)/ 60,000 10,000 -0-

Sam F. Willson, Jr., 1994 334,062 75,000 -0- -0- 26,725
Executive V.P. 1993 334,062 28,000 15,000 28,600
1992 344,603/(3)/ 60,000 15,000 29,443
</TABLE>

________________________

/(1)/ Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed
the lesser of $50,000 or 10 percent of annual salary and bonus for any
named individual.

/(2)/ Salary amounts for Messrs. Wyatt, Arledge and Cordes for 1992 and 1993
include directors' fees paid during these periods which were previously
reported under "All Other Compensation." Directors' fees for members of
management of Coastal were eliminated in September, 1993. There was no
salary change for Mr. Wyatt during 1994; the reduced base pay level for
1994 was due to the September 1993 salary reduction (reported in the 1994
Coastal Proxy Statement) being in effect for all of 1994.

/(3)/ Due to Coastal's practice of paying bi-weekly, there is one extra pay
period reflected in the 1992 salary. Normally there are 26 pay periods,
but approximately once every 11 years there are 27 pay periods; 1992 was
such a year.

/(4)/ Although 1993 bonus awards were not finalized by Coastal's Compensation
and Executive Development Committee until after the 1994 Coastal Proxy
Statement had been prepared, all awards were based solely on 1993
performance. Bonuses for 1992 were paid in equal installments over a
three-year period, provided the employee was still employed on the
anniversary date ofthe award. The 1994 bonuses were based on the following
factors: the individual's position; the individual's responsibility and
the individual's ability to impact Coastal's financial success.

/(5)/ The options do not carry any stock appreciation rights.

12
<PAGE>

/(6)/ All Other Compensation for 1994 consists of: (i) Coastal contributions to
the Coastal Thrift Plan (O. S. Wyatt, Jr. $12,000; David A. Arledge
$12,000; James F. Cordes $12,000; James A. King $4,232 and Sam F. Willson,
Jr. $12,000) and (ii) certain payments in lieu of Thrift Plan
contributions (O. S. Wyatt, Jr. $55,928; David A. Arledge $32,310; James
F. Cordes $35,378; James A. King $2,645 and Sam F. Willson, Jr. $14,725).
These payments are made to all employees of Coastal and its subsidiaries
who participate in the Thrift Plan who must discontinue their Thrift Plan
participation due to federal statutory limits.

Mr. Cordes is employed pursuant to a five-year employment contract expiring
in 1995, which provides that if he is terminated for a reason not permitted by
the employment contract, he will be entitled to receive for the remainder of the
term the salary, employee benefits, perquisites, salary increases, bonuses and
other incentive compensation which he would have received had he not been
terminated. Such reasons are a significant change in title, duties, authorities
or reporting responsibilities, a reduction in salary or benefits or a move of
the location of his office to a location not acceptable to him.

STOCK OPTIONS

No option/SAR grants were made to the Named Executive Officers during the
fiscal year ended December 31, 1994.

OPTION/SAR EXERCISES AND HOLDINGS

The following table sets forth information with respect to the Named
Executive Officers, concerning the exercise of options during the last fiscal
year and unexercised options and SARs held as of the fiscal year ("FY") ended
December 31, 1994.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES (1994)

<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)/(1)/

Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ------------------- --------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
O. S. Wyatt, Jr. -0- -0- -0- / -0- -0- / -0-
David A. Arledge -0- -0- 167,371 / 103,002 473,536 / -0-
James F. Cordes -0- -0- 98,785 / 73,002 206,367 / -0-
James A. King -0- -0- 2,000 / 28,000 -0- / -0-
Sam F. Willson, Jr. -0- -0- 28,149 / 45,000 12,825 / -0-

</TABLE>

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

/(1)/ $-based on the market price of $25.63 at December 31, 1994.

13
<PAGE>

COMPENSATION AND EXECUTIVE DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

The following report has been provided by Coastal's Compensation and
Executive Development Committee (the "Committee") of the Board of Directors in
accordance with current Securities and Exchange Commission ("S.E.C.") proxy
statement disclosure requirements. The members of the Committee include John M.
Bissell (Chairman), Roy D. Chapin, Jr., and Jerome S. Katzin.

This material states Coastal's current overall compensation philosophy and
program objectives. Detailed descriptions of Coastal's compensation programs are
provided as well as the information on Coastal's 1994 pay levels for the CEO.

OVERALL OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM

Coastal's compensation philosophy and program objectives are directed by two
primary guiding principles. First, the program is intended to provide fully
competitive levels of compensation - at expected levels of performance - in
order to attract, motivate and retain talented executives. Second, the program
is intended to create an alignment of interests between Coastal's executives and
shareowners such that a significant portion of each executive's compensation is
directly linked to maximizing shareholder value.

In support of this philosophy, the executive compensation program is designed
to reward performance that is directly relevant to Coastal's short-term and
long-term success. As such, Coastal attempts to provide both short-term and
long-term incentive pay that varies based on corporate and individual
performance.

To accomplish these objectives, the Committee has structured the executive
compensation program with three primary underlying components: base salary,
annual incentives, and long-term incentives (i.e., stock options). The following
sections describe Coastal's plans by element of compensation and discuss how
each component relates to Coastal's overall compensation philosophy.

In reviewing this information, reference is often made to the use of
competitive market data as criteria for establishing targeted compensation
levels. Coastal targets the market 50th percentile for its total compensation
program and actual total compensation rates are generally consistent with that
target. (However, Coastal's competitive pay posture varies by pay element, as
described below.) Several market data sources are used by Coastal, including
energy industry norms for the publicly traded peer companies included in
Coastal's shareholder return performance graphs, as reflected in these
companies' proxy statements. In addition, we utilize published survey data and
data obtained from independent consultants that are for general industry
companies similar in size (i.e., revenues) to Coastal. The published surveys
include data on over 40 companies of comparable size to Coastal, as measured by
revenues. Greater emphasis is placed on the published data and data obtained
from consultants than on the data for proxy peers, since the published data and
consulting data are reflective of company size.

BASE SALARY PROGRAM

Coastal's base salary program is based on a philosophy of providing base pay
levels that fall between the market 50th and 75th percentiles. Coastal
periodically reviews its executive pay levels to assure consistency with the
external market. Generally, Coastal's actual base salary levels for 1994 for
executives as a group were consistent with the targeted percentiles. We believe
it is crucial to provide strongly competitive salaries over time in order to
attract and retain executives who are highly talented.

14
<PAGE>

Annual salary adjustments for Coastal are based on several factors: general
levels of market salary increases, individual performance, competitive base
salary levels, and Coastal's overall financial results. Coastal reviews
performance qualitatively considering total shareholder returns, the level of
earnings, return on equity, return on total capital and individual business unit
performance. These criteria are assessed qualitatively and are not weighted. All
base salary increases are based on a philosophy of pay-for-performance and
perceptions of an individual's long-term value to Coastal. As a result,
employees with higher levels of performance sustained over time will be paid
correspondingly higher salaries.

THE ANNUAL BONUS PLAN

Coastal's Annual Bonus Plan is intended to (1) reward key employees based on
company/business unit and individual performance; (2) motivate key employees;
and (3) provide competitive cash compensation opportunities to plan
participants. Under the plan, target award opportunities vary by individual
position and are expressed as a percent of base salary. The individual target
award opportunities, which are slightly below market median levels, are then
aggregated into a total target pool which is adjusted as described below. The
amount a particular executive may earn is directly dependent on the individual's
position, responsibility, and ability to impact Coastal's financial success.

The actual bonus pool is established each year by modifying the target pool
based on Coastal's overall performance against measures established by the
Committee. In fiscal year 1994, the key performance measure considered was
earnings before interest and taxes ("EBIT") against plan. This measure was
weighted 50% of the total bonus program. In 1994 Coastal's EBIT performance
significantly improved over 1993 performance. This 1994 EBIT achievement was
above threshold standards (minimum performance level for bonus payment) but
below a very aggressive plan, resulting in the EBIT portion of the bonus paid
being below target. The remaining 50% of the annual bonus opportunity in 1994 is
a discretionary annual bonus pool. As a result, no formula performance measures
were used in establishing the size of awards under this portion of the plan.
However, in establishing the size of the discretionary bonus pool, the Committee
considered Coastal's Return on Equity relative to industry peers (using the same
peers included in the shareholder return graphs), Return on Total Capital
compared to industry peers, the EBIT performance of each business unit, progress
made toward improving Coastal's operational and financial performance, and the
need to reward unique individual contributions. These measures were not formally
weighted by the Committee. The size of the discretionary bonus pool element was
established above threshold but below target based on the qualitative
performance assessment described above. As a result, actual bonus payments for
1994 were below target and median market levels.

Individual awards from the established bonus pool are recommended by senior
management, with advice and consent from the Committee. Individual awards from
the pool are based on business unit and individual employee performance, future
potential, and competitive considerations. All individual performance
assessments are conducted in a non-formula fashion without specific goal
weightings. The total bonus awards made may not exceed the amount of funds in
the bonus pool.

LONG-TERM INCENTIVE PLAN

Coastal's Long-Term Incentive Plan ("LTIP") is designed to focus executive
efforts on the long-term goals of Coastal and to maximize total return to
Coastal's shareholders. While Coastal's LTIP allows the Committee to use a
variety of long-term incentive devices, the Committee has relied solely on stock
option awards to provide long-term incentive opportunities in recent years.

Stock options align the interests of employees and shareholders by providing
value to the executive through stock price appreciation only. All stock options
have a ten year term before expiration and are fully exercisable within 7 years
of the grant date.

No stock options were granted to the Named Executive Officers in 1994 since
Coastal made larger than normal grants to key executives in December 1993.
However, it is anticipated that stock option awards will be made periodically at
the discretion of the Committee in the future. As in past years, the number of
shares actually granted

15
<PAGE>

to a particular participant is also based on Coastal's financial success, its
future business plans, and the individual's position and level of responsibility
within Coastal. All of these factors are assessed subjectively and are not
weighted.

1994 CHIEF EXECUTIVE OFFICER PAY

As previously described, the Committee considers several factors in
developing an executive's compensation package. For the CEO, these include
competitive market practices (consistent with the philosophy described for other
executives), experience, achievement of strategic goals, and the financial
success of Coastal (considering the factors described under the annual bonus
plan above).

Mr. Wyatt received no salary increase in 1994. The Committee took no action
regarding Mr. Wyatt's base salary, in spite of significantly improved Coastal
performance during the year. This lack of any adjustment is not a reflection of
performance; rather, it is based on considering strong input from the CEO, who
wants to see continued improvement in shareholder returns before receiving any
base salary increase.

Mr. Wyatt's bonus for 1994 performance was $200,000. This bonus award was
below targeted levels (and below market median levels) since Coastal's aggregate
performance on the measures described in the annual bonus section of this report
was below the aggressive Coastal targets (but above 1993 levels).

The Committee granted no stock options to Mr. Wyatt in 1994 (consistent with
past practices), considering the strongly expressed opinion of the CEO. Mr.
Wyatt and the Committee considered Mr. Wyatt's current level of stock ownership
in reaching this decision.

$1 MILLION PAY DEDUCTIBILITY CAP

Under Section 162(m) of the Internal Revenue Code, public companies are
precluded from receiving a tax deduction on compensation paid to executive
officers in excess of $1 million. To address the $1 million pay deductibility
cap issue, Coastal's 1994 LTIP was structured so that stock option awards (which
are intended to be the primary long-term incentive vehicle for the present time)
qualify for an exemption from the $1 million pay deductibility limit.

Also, at the present time, the CEO is the only executive whose base salary
plus target bonus exceeds $1 million. In order to preserve Coastal's tax
deduction for the CEO's base salary plus bonus, Coastal has established a
nonqualified deferred compensation program for Mr. Wyatt. Under this program,
any annual incentive awards that bring Mr. Wyatt's cash compensation to a level
over $1 million will be deferred so that payments occur after Mr. Wyatt is no
longer a Named Executive Officer, thus preserving the deductibility of the pay
for Coastal.

COMPENSATION AND EXECUTIVE DEVELOPMENT COMMITTEE

John M. Bissell, Chairman
Roy D. Chapin, Jr.
Jerome S. Katzin

16
<PAGE>

PENSION PLAN

The following table shows for illustration purposes the estimated annual
benefits payable currently under the Pension Plan and Coastal's Replacement
Pension Plan described below upon retirement at age 65 based on the compensation
and years of credited service indicated.

PENSION PLAN TABLE

YEARS OF CREDITED SERVICE
------------------------------------------------
5-YEAR FINAL
AVERAGE PAY 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000.......... $34,265 $45,687 $57,109 $68,531 $67,812
150,000.......... 41,765 55,687 69,609 83,531 82,812
175,000.......... 41,765 55,687 69,609 83,531 82,812
200,000.......... 41,765 55,687 69,609 83,531 82,812
225,000.......... 41,765 55,687 69,609 83,531 82,812
250,000.......... 41,765 55,687 69,609 83,531 82,812
300,000.......... 41,765 55,687 69,609 83,531 82,812
400,000.......... 41,765 55,687 69,609 83,531 82,812
450,000.......... 41,765 55,687 69,609 83,531 82,812
500,000.......... 41,765 55,687 69,609 83,531 82,812

</TABLE>

(A) Compensation covered under the Pension Plan for employees of Coastal and the
Coastal Replacement Pension Plan generally includes only base salary and is
limited to $150,000 for 1994.

(B) Federal legislation has reduced the benefit which may be earned due to
future service; however, benefits previously earned may not be reduced. At
December 31, 1994 each of the individuals named in the Summary Compensation
Table had covered salary for future benefit accrual of $150,000 and the
following years of credited service and pension payable at age 65 (or
current age, if over 65): Mr. Wyatt, 39 years, $469,834; Mr. Arledge, 14
years, $54,181; Mr. Cordes, 17 years, $74,523; Mr. King, 2 years, $9,474
(not vested) and Mr. Willson, 22 years, $98,357.

(C) The normal form of retirement income is a straight life annuity. Benefits
payable under the Pension Plan are subject to offset by 1.5% of applicable
monthly social security benefits multiplied by the number of years of
credited service (up to 33 1/3 years).

The Employee Retirement Income Security Act of 1974, as amended by subsequent
legislation, limits the retirement benefits payable under the tax-qualified
Pension Plan. Where this occurs, Coastal will provide to certain executives,
including persons named in the Summary Compensation Table, additional
nonqualified retirement benefits under a Coastal Replacement Pension Plan. These
benefits, plus payments under the Pension Plan, will not exceed the maximum
amount which Coastal would have been required to provide under the Pension Plan
before application of the legislative limitations, and are reflected in the
above table and footnote (B).

17
<PAGE>

PERFORMANCE GRAPHS - SHAREHOLDER RETURN ON COMMON STOCK

FIVE-YEAR CUMULATIVE VALUES
$100 INVESTED 12/31/89
DIVIDENDS REINVESTED

[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Coastal $100 $99 $ 77 $ 76 $ 90 $ 84
S&P 500 $100 $97 $126 $136 $150 $152
Index(1)(2) $100 $81 $ 73 $ 85 $104 $ 96
</TABLE>

YEAR ENDED 12/31

(1) The Index is based on Value Line Diversified Natural Gas Group - the
Performance Graphs reflect total shareholder return weighted to reflect the
market capitalizations of the peer companies. The peer group is comprised
of: NorAm, Burlington Res., Columbia, Consolidated Nat. Gas, Eastern
Enterprises, Enron, Enserch, Equitable Res.,KN Energy, Mitchell Energy,
National Fuel Gas, Panhandle Eastern, Seagull Energy, Sonat, Southwestern
Energy, Tenneco, Transco, Valero and Williams Cos.
(2) Coastal is excluded from the Index.

TEN-YEAR TWO MONTHS CUMULATIVE VALUES
$100 INVESTED 12/31/84
DIVIDENDS REINVESTED

[GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
Two
Months
Ended 2/28
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Coastal $100 $209 $190 $214 $283 $408 $403 $319 $313 $370 $345 $382
S&P 500 $100 $132 $156 $164 $192 $252 $245 $317 $343 $378 $380 $408
Index(1)(2) $100 $107 $105 $103 $120 $173 $145 $135 $161 $200 $186 $210
</TABLE>

YEAR ENDED 12/31

18
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

(a) Security ownership of certain beneficial owners.

The following is information, as of March 15, 1995, on each person known or
believed by ANR Pipeline to be the beneficial owner of 5% or more of any class
of its voting securities:

Amount and Nature
Name and Address of Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
- -------------------------- ---------------------------------- ------------------- ---------
<S> <C> <C> <C>

Common Stock, American Natural Resources Company 1,000 shares direct 100%
$100 par value per share One Woodward Avenue
Detroit, Michigan 48226

</TABLE>

(b) Security ownership of management.

ANR Pipeline is an indirect, wholly-owned subsidiary of Coastal. Information
concerning the security ownership of certain beneficial owners and management of
Coastal is contained in this section.

The total number of shares of stock of Coastal outstanding as of March 15,
1995 is 112,960,388 consisting of 63,118 shares of $1.19 Cumulative Convertible
Preferred Stock, Series A (the "Series A Preferred Stock"), 83,756 shares of
$1.83 Cumulative Convertible Preferred Stock, Series B (the "Series B Preferred
Stock"), 34,191 shares of $5.00 Cumulative Convertible Preferred Stock, Series C
(the "Series C Preferred Stock") (the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock are referred to herein
collectively as the "Preferred Stock"), 8,000,000 non-voting shares of $2.125
Cumulative Preferred Stock, Series H, 104,363,374 shares of Common Stock and
415,949 shares of Class A Common Stock.

Each voting share of Common Stock or Preferred Stock entitles the holder to
one vote with respect to all matters to come before a shareholders' meeting,
while each share of Class A Common Stock entitles the holder to 100 votes.
However, 25% of Coastal's directors standing for election at each annual meeting
will be determined solely by holders of the Common Stock and voting Preferred
Stock voting as a class.

19
<PAGE>

The following table sets forth information, as of March 15, 1995, with
respect to each person known or believed by Coastal to be the beneficial owner,
who has or shares voting and/or investment power (other than as set forth
below), of more than five percent (5%) of any class of its voting securities.

NAME AND ADDRESS PERCENT (%)
OF BENEFICIAL OWNER TITLE OF CLASS NUMBER OF SHARES OF CLASS (1)
- ---------------------------- --------------------- ----------------- -------------
<S> <C> <C> <C>
O. S. Wyatt, Jr. Class A Common Stock 154,577 (2) 36.0
Chairman of the Board
of Coastal
Nine Greenway Plaza
Houston, Texas 77046-0995

Trustee/Custodian under the Common Stock 14,073,783 (3) 13.4
Thrift Plan, ESOP and Class A Common Stock 76,988 (3) 17.9
Pension Plan of Coastal
and its subsidiaries
Texas Commerce Bank
National Association
600 Travis, 10th Flr.
Houston, Texas 77002

Isabel H. Long Series A Preferred Stock 28,976 45.9
485 S. Parkview Ave.,
Columbus, Ohio 43209-1075

The DeZurik Family Series C Preferred Stock 34,191 (4) 100.0
c/o David DeZurik
2460 S.E. 8th St.
Pompano Beach, Florida 33062

</TABLE>

__________

(1) Class includes presently exercisable stock options held by directors and
executive officers.

(2) Includes 7,354 shares of Class A Common Stock owned by the spouse and a
son of Mr. Wyatt, as to which shares beneficial ownership is disclaimed.

(3) The Trustee/Custodian is the record owner of these shares; and also is
the record owner of 953 shares of the Series B Preferred Stock, each of
which is convertible into 3.6125 shares of Common Stock and 0.1 share of
Class A Common Stock. Voting instructions are requested from each
participant in the Thrift Plan and ESOP and from the trustees under a
Pension Trust. Absent voting instructions, the Trustee is permitted to
vote Thrift Plan shares on any matter, but has no authority to vote ESOP
shares or Pension Plan shares. Nor does the Trustee/Custodian have any
authority to dispose of shares except pursuant to instructions of the
administrator of the Thrift Plan and ESOP or pursuant to instructions from
the trustees under the Pension Trust.

(4) Members of the DeZurik family acquired the Series C Preferred Stock in
connection with a 1972 Agreement of Merger involving the acquisition of
Colorado, a subsidiary of Coastal.

20
<PAGE>

The following table sets forth information, as of March 15, 1995, regarding
each of the then current directors, including Class III directors standing for
election, and all directors and executive officers as a group. Each director has
furnished the information with respect to age, principal occupation and
ownership of shares of stock of Coastal. Messrs. Bissell, Burrow, Chapin and
Katzin are Class I directors whose terms expire in 1996; Messrs. Arledge,
Brundrett, Wooddy and Wyatt are Class II directors whose terms expire in 1997
and Messrs. Cordes, Gates, Johnson, Marshall and McDade are Class III directors
whose terms expire in 1995.

NUMBER OF SHARES
NAME, (AGE), YEAR OFFICES WITH COASTAL BENEFICIALLY PERCENT(%)
FIRST BECAME DIRECTOR AND/OR PRINCIPAL OCCUPATION TITLE OF CLASS OWNED(1) OF CLASS*
--------------------------- ------------------------ ----------------- ----------
<S> <C> <C> <C> <C>
O. S. Wyatt, Jr. Chairman of the Board and Common Stock 3,179,981(2) 3.0
(70), 1955 Chief Executive Officer Class A Common Stock 154,577(2) 36.0

Harold Burrow Vice Chairman of the Board; Common Stock 154,112(2)
(80), 1973 Chairman of Colorado and ANR Class A Common Stock 13,602 3.2

David A. Arledge President and Common Stock 179,122
(50), 1988 Chief Operating Officer Class A Common Stock 13,940 3.2

John M. Bissell Chairman and Chief Executive Common Stock 4,576
(64), 1985 Officer of Bissell Inc. Class A Common Stock -0-

George L. Brundrett, Jr. Attorney; Former Senior Vice Common Stock 4,910
(73), 1973 President and General Counsel Class A Common Stock 2,290
of Coastal

Roy D. Chapin, Jr. Former Chairman and Common Stock 3,250(2)
(79), 1988 Chief Executive Officer Class A Common Stock -0-
of American Motors
Corporation

James F. Cordes Executive Vice President; Common Stock 120,062
(54), 1985 President of ANR: President, Class A Common Stock -0-
Coastal Natural Gas Group

Roy L. Gates Retired; Ranching and Common Stock 4,095
(66), 1969 Investments Class A Common Stock 2,736

Kenneth O. Johnson Senior Vice President Common Stock 84,042
(74), 1988 Class A Common Stock 9,604 2.2

Jerome S. Katzin Retired Investment Banker Common Stock 41,803(2)
(76), 1983 Class A Common Stock -0-

J. Howard Marshall, II Retired; Former Executive of Common Stock 11,924(2)
(90), 1973 Allied Chemical Corporation, Class A Common Stock 600(2)
Ashland Oil and Refining
Company and Signal Oil and
Gas Company

Thomas R. McDade Senior Partner, Law Firm of Common Stock 500
(62), 1993 McDade & Fogler L.L.P., Class A Common Stock -0-
Houston

L. D. Wooddy, Jr. Retired; Former President Common Stock 2,000
(68), 1992 of Exxon Pipeline Company Class A Common Stock -0-

All directors and executive officers as a group Common Stock 4,383,914(3) 4.2
(34 persons, including the above) Class A Common Stock 200,700(3) 46.7

</TABLE>

* Less than one percent unless otherwise indicated. Class includes outstanding
shares and presently exercisable stock options held by directors and executive
officers. Excluding presently exercisable stock options, directors and
executive officers as a group would own 186,832 shares of Class A Common
Stock, which would constitute 44.9% of the shares of such class.

(1) Except for the shares referred to in Notes 2 and 3 below, and the shares
represented by presently exercisable stock options, the holders are
believed by Coastal to have sole voting and investment power

21
<PAGE>

as to the shares indicated. Amounts include shares in Coastal ESOP and
Thrift Plan, and presently exercisable stock options held by Messrs.
Burrow (14,189 shares of Common Stock), Arledge (160,503 shares of Common
Stock and 13,868 shares of Class A Common Stock), Cordes (103,785 shares
of Common Stock) and Johnson (53,915 shares of Common Stock).

(2) Includes shares owned by the spouse and a son of Mr. Wyatt (266,295
shares of Common Stock and 7,354 shares of Class A Common Stock), by the
spouse of Mr. Burrow (5,000 shares of Common Stock), by the spouse of Mr.
Chapin (1,000 shares of Common Stock) and by the spouse of Mr. Katzin (928
shares of Common Stock), as to which shares beneficial ownership is
disclaimed; also includes shares owned by the estate of the late Mrs.
Marshall (4,362 shares of Common Stock and 100 shares of Class A Common
Stock).

(3) Includes presently exercisable stock options to purchase 674,265 shares
of Common Stock and 13,868 shares of Class A Common Stock; also includes
280,339 shares of Common Stock and 7,354 shares of Class A Common Stock
owned by spouses and children, as to which shares beneficial ownership is
disclaimed; also includes 4,362 shares of Common Stock and 100 shares of
Class A Common Stock owned by the estate named in Note 2 above. In
addition, one executive officer owns 8 shares of Series B Preferred Stock,
each of which is convertible into 3.6125 shares of Common Stock and 0.1
share of Class A Common Stock.

No incumbent director is related by blood, marriage or adoption to another
director or to any executive officer of Coastal or its subsidiaries or
affiliates.

Except as hereafter indicated, the above table includes the principal
occupation of each of the directors during the past five years. The listed
executive officers have held various executive positions with Coastal, ANR, ANR
Pipeline and/or Colorado during the five-year period.

Mr. Bissell is a member of the Boards of Directors of Old Kent Financial
Corporation and Batts Inc.

Mr. Cordes is a member of the Board of Directors of Comerica Inc.

Mr. Katzin is a member of the Board of Directors of Qualcomm Incorporated.

Mr. Marshall is a member of the Boards of Directors of Missouri-Kansas-Texas
Railroad Company and Presidio Oil Company.

Mr. McDade is a trial lawyer and the founding senior partner of the Houston
law firm of McDade & Fogler L.L.P. Prior to forming McDade & Fogler L.L.P. he
was a senior partner in the Houston law firm of Fulbright & Jaworski. He is a
member of the Board of Directors of Equity Corporation International.

Messrs. Arledge, Burrow, Cordes and Wyatt are directors of Colorado and ANR
Pipeline. Both of these subsidiaries of Coastal are subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

(a) Transactions with management and others.

ANR Pipeline participates in a program which matches short-term cash excesses
and requirements of participating affiliates, thus minimizing borrowings from
outside sources. At December 31, 1994, the Company had advanced $235.2 million
to an associated company at a market rate of interest. Such amount is repayable
on demand.

22
<PAGE>

Additional information called for by this item is set forth under Item 11,
"Executive Compensation," and Note 11 of Notes to Consolidated Financial
Statements included herein.

(b) Certain business relationships.

None.

(d) Transactions with promoters.

Not applicable.

23
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) The following documents are filed as part of this Annual Report or
incorporated herein by reference:

1. Financial Statements.

The following Consolidated Financial Statements of ANR Pipeline and
Subsidiaries are included in response to Item 8 hereof on the attached
pages as indicated:

Page
----
<S> <C>

Independent Auditors' Report............................................................. F-6
Consolidated Balance Sheet at December 31, 1994 and 1993................................. F-7
Statement of Consolidated Earnings for the Years Ended December 31, 1994, 1993 and 1992.. F-9
Statement of Consolidated Retained Earnings for the Years Ended December 31, 1994, 1993
and 1992................................................................................ F-9
Statement of Consolidated Cash Flows for the Years Ended December 31, 1994, 1993 and
1992.................................................................................... F-10
Notes to Consolidated Financial Statements............................................... F-11

</TABLE>

2. Financial Statement Schedules.

Schedules are omitted as not applicable or not required, or the
required information is shown in the Consolidated Financial Statements or
Notes thereto.

3. Exhibits.

(3.1)+ Composite Certificate of Incorporation of ANR Pipeline effective
as of December 31, 1987 (Filed as Module ANRCertIncorp on
March 29, 1994).

(3.2)* Amended By-laws of ANR Pipeline effective as of September 21,
1994.

(4) With respect to instruments defining the rights of
holders of long-term debt, the Company will furnish to the
Securities and Exchange Commission any such document on request.

(4.1)+ Board Resolution dated September 22, 1975
establishing the $2.675 Series of Cumulative Preferred Stock
(Filed as Module BoardRes_092275 on March 29, 1994).

(4.2)+ Board Resolution dated October 26, 1976
establishing the $2.12 Series of Cumulative Preferred Stock
(Filed as Module BoardRes_102676 on March 29, 1994).

(4.3)+ Board Resolution dated May 12, 1980 establishing the $12.00
Series of Cumulative Preferred Stock (Filed as Module
BoardRes_051280 on March 29, 1994).

(4.4)+ Indenture dated as of February 15, 1994 and First Supplemental
Indenture dated as of February 15, 1994 for the $125 million of
7-3/8% Debentures due February 15, 2024. (Filed as Exhibit 4.4
to ANR Pipeline's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.)

(10.1)+ Form of Employment Agreement between ANR Pipeline and certain of
its executive officers (Filed as a Module ANREmployAgree on
March 29, 1994).

24
<PAGE>

(10.2)+ Form of Employment Agreement between Coastal and certain
Company executive officers (Filed as Module TCCEmployAgree on
March 29, 1994).

(21)* Subsidiaries of the Company.

(23)* Consent of Deloitte & Touche LLP.

(24)* Power of Attorney (included on signature pages herein).

(27)* Financial Data Schedule.

Note:

+ Indicates documents incorporated by reference from the prior filings
indicated.
* Indicates documents filed herewith.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the quarter ended December 31, 1994.

25
<PAGE>

POWER OF ATTORNEY

Each person whose signature appears below hereby appoints Coby C. Hesse,
William L. Johnson and Austin M. O'Toole and each of them, any one of whom may
act without the joinder of the others, as his attorney-in-fact to sign on his
behalf and in the capacity stated below and to file all amendments to this
Annual Report on Form 10-K, which amendment or amendments may make such changes
and additions thereto as such attorney-in-fact may deem necessary or
appropriate.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

ANR PIPELINE COMPANY
(Registrant)

By: JEFFREY A. CONNELLY
--------------------------
Jeffrey A. Connelly
President, Chief Executive
Officer and Director
March 29, 1995

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

By: JAMES F. CORDES By: DAVID A. ARLEDGE
--------------------------- ---------------------------
James F. Cordes David A. Arledge
Chairman Principal Financial Officer
March 29, 1995 and Director
March 29, 1995

By: WILLIAM L. JOHNSON By: HAROLD BURROW
--------------------------- ---------------------------
William L. Johnson Harold Burrow
Principal Accounting Officer Vice Chairman
March 29, 1995 March 29, 1995

By: RICHARD A. LIETZ By: JOHN M. BISSELL
--------------------------- ---------------------------
Richard A. Lietz John M. Bissell
Executive Vice President, Director
Chief Operating Officer and Director March 29, 1995
March 29, 1995

26
<PAGE>

By: ROY D. CHAPIN, JR. By: LAWRENCE P. DOSS
--------------------------- ---------------------------
Roy D. Chapin, Jr. Lawrence P. Doss
Director Director
March 29, 1995 March 29, 1995

By: MARTHA O. HESSE By: WILBER H. MACK
--------------------------- ---------------------------
Martha O. Hesse Wilber H. Mack
Director Director
March 29, 1995 March 29, 1995

By: J. CARLETON MACNEIL, JR. By: JAMES H. MCNEAL, JR.
--------------------------- ---------------------------
J. Carleton MacNeil, Jr. James H. McNeal, Jr.
Director Director
March 29, 1995 March 29, 1995

By: O. S. WYATT, JR.
---------------------------
O. S. Wyatt, Jr.
Director
March 29, 1995

27
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The Notes to Consolidated Financial Statements contain information that is
pertinent to the following analysis.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW. Internally generated funds have been the primary source to meet
mandatory debt and preferred stock retirements and other cash requirements of
the Company over the past three years.

During 1993 the Company retired $78.1 million of its long-term debt
obligations, of which $37.7 million of First Mortgage Pipe Line Bonds and $9.7
million of Debentures represented early redemptions. Interest rates associated
with the early redemptions ranged from 9-5/8% to 13-1/4%, which were
significantly higher than market rates.

On September 23, 1993, the Company filed a shelf registration statement with
the Securities and Exchange Commission for the public offering of up to $200
million in senior unsecured debt securities, which became effective on October
5, 1993. Subsequently, in February 1994, the Company completed an offering of
$125 million in principal amount of 7-3/8% 30-year Debentures due in February
2024. The net proceeds from the sale of the Debentures were added to the general
funds of the Company and were used for capital expenditures and for other
general corporate purposes, including the payment of a $255 million dividend on
its common stock in March 1994. In June 1994, the Company paid an additional $76
million dividend on its common stock which was financed from internally
generated funds.

On June 16, 1994, the Company redeemed all of the outstanding shares of its
Cumulative Preferred Stock. For additional information regarding this matter,
see Note 3 of Notes to Consolidated Financial Statements included herein.

The Company uses the following consolidated ratios to measure liquidity and
ability to meet future funding needs and debt service requirements.

1994 1993 1992
----- ----- -----
<S> <C> <C> <C>

Cash flows from operating activities to long-term debt
and capital lease obligations........................................ 55.9% 66.0% 58.0%

Long-term debt and capital lease obligations to total capitalization.. 35.7% 27.3% 32.9%

</TABLE>

The 1994 decrease in cash flows from operating activities to long-term debt
and capital lease obligations resulted from an increase in long-term debt due to
the issuance of $125 million of Debentures discussed above. The 1993 increase in
the cash flows from operating activities to long-term debt and capital lease
obligations resulted from a decrease in long-term debt due to the early
redemptions in 1993 discussed above. The increase in 1994 in long-term debt and
capital lease obligations to total capitalization resulted from issuance of
long-term debt and a decrease in retained earnings resulting from dividends
paid. The decrease in 1993 in long-term debt and capital lease obligations to
total capitalization resulted from the retirement of long-term debt and an
increase in retained earnings.

Management believes that the Company's stable financial position and earnings
ability will enable it to continue to generate and obtain capital for financing
needs in the foreseeable future.

Expenditures for each of the years 1992 through 1994 and the sources of
capital used to finance these expenditures are summarized in the "Statement of
Consolidated Cash Flows."

F-1
<PAGE>

CAPITAL EXPENDITURES. Capital expenditures were $62.0 million in 1994 and
$49.4 million in 1993. Capital expenditures for 1995, including the Company's
equity investments in partnerships and joint ventures, are currently estimated
at $86 million.

Funding for certain proposed natural gas pipeline projects is anticipated to
be provided through nonrecourse financings in which the projects' assets and
contracts will be pledged as collateral. This type of financing typically
requires the participants to make equity investments totaling approximately 20%
to 30% of the cost of the project, with the remainder financed on a long-term
basis. Equity participation by other entities will also be considered. To the
extent required, cash for equity contributions to projects will be from general
corporate funds. Financing for the remaining budgeted expenditures in 1995 will
be accomplished by the use of internally generated funds. Information concerning
these projects is contained in Part I herein under Item 1, "Business - Other
Developments."

GAS IN UNDERGROUND STORAGE. Gas in underground storage of $207.5 million was
reclassified to "Property, Plant and Equipment" as of December 31, 1993. For
additional information regarding this matter, see Note 1 of Notes to
Consolidated Financial Statements included herein.

ASSETS RELATED TO EXCESS GAS SUPPLY. "Assets related to excess gas supply"
are being recovered through the currently allowed billing mechanism under FERC
Order No. 528, through gas takes against prepaid gas and through cash recoveries
of gas prepayments under certain take-or-pay contracts. "Assets related to
excess gas supply" decreased by $29.9 million and $82.6 million in 1994 and
1993, respectively. The decline in each year is attributable to the recovery of
producer contract reformation costs pursuant to FERC Order No. 528 and, in 1993,
a significant first quarter cash recovery of a prepayment for gas under a
purchase contract with a producer.

CURRENCY SWAPS. The Company has outstanding bonds for 125 million Swiss
francs which mature in October 1995, and are expected to be extinguished through
an affiliate's repayment of a loan or through alternative financing
arrangements. The Company's entire foreign currency risk associated with this
debt, including principal and interest, has been hedged by entering into
currency swap agreements with maturities matching those of the underlying debt.
In the event of nonperformance by the counterparties to the currency swaps, the
Company would have possible exposure to credit loss in the amount of $39.5
million as of December 31, 1994. However, the Company has largely mitigated the
risk of such a loss occurring by limiting the counterparties of these agreements
to a prominent international bank and a prominent international financial
institution. For additional information regarding the outstanding Swiss franc
bonds, see Note 4 of Notes to Consolidated Financial Statements included herein.

FINANCING ALTERNATIVES. Alternatives to finance additional capital and other
expenditures are limited principally by the terms of certain debt instruments of
the Company and certain affiliates. Under the most restrictive of such
instruments, as of December 31, 1994, ANR Pipeline and certain affiliates could
incur in the aggregate approximately $770 million of additional indebtedness.
For the Company and these affiliates to incur indebtedness for borrowed money in
excess of this amount, approximately $350 million of indebtedness of Coastal
Natural Gas would need to be retired.

The Company participates in a program which matches short-term cash excesses
and requirements of participating affiliates, thus minimizing borrowing from
outside sources. At December 31, 1994, the Company had advanced $235.2 million
to an associated company at a market rate of interest. Such amount is repayable
upon demand.

ENVIRONMENTAL. The Company's operations are subject to extensive and
evolving federal, state and local environmental laws and regulations which may
affect such operations and costs as a result of their effect on the
construction, operation and maintenance of its pipeline facilities. The Company
anticipates annual capital expenditures of $2 million over the next several
years aimed at maintaining compliance with such laws and regulations.
Additionally, appropriate governmental authorities may enforce the laws and
regulations with a variety of civil and criminal enforcement measures, including
monetary penalties and remediation requirements.

F-2
<PAGE>

The Comprehensive Environmental Response, Compensation and Liability Act,
also known as "Superfund," as reauthorized, imposes liability, without regard to
fault or the legality of the original act, for disposal of a "hazardous
substance." The Company has been named as a potentially responsible party in
four federal "Superfund" waste disposal sites and one state "Superfund" site. At
the four federal sites for which the EPA has developed sufficient information to
estimate total clean-up costs of approximately $31.6 million, the Company
estimates its pro-rata exposure is approximately $.8 million. At the state site,
the Company has been named a de minimis potentially responsible party. However,
since the agency having jurisdiction over the site is currently unable to
provide an estimate of the total clean-up costs, the Company is unable to
calculate its share of those costs.

There are additional areas of environmental remediation responsibilities
which may fall on the Company. The states have regulatory programs that mandate
waste clean-up. The Clean Air Act Amendments of 1990 include new permitting
regulations which will result in increased operating expenditures.

Future information and developments will require the Company to continually
reassess the expected impact of these environmental matters. However, the
Company has evaluated its total environmental exposure based on currently
available data, including its potential joint and several liability, and
believes that compliance with all applicable laws and regulations will not have
a material adverse impact on the Company's liquidity, consolidated financial
position or results of operations.

RESULTS OF OPERATIONS

On April 8, 1992 the FERC issued Order 636 which required significant changes
in the services provided by interstate natural gas pipelines (see Note 7 of
Notes to Consolidated Financial Statements included herein). The intent of Order
636 is to insure that interstate pipeline transportation services are equal in
quality for all gas supplies, whether the buyer purchases gas from the pipeline
or from any other gas supplier. The FERC amended its regulations to require the
use of the straight fixed variable ("SFV") rate setting methodology. In general,
SFV provides that all fixed costs of providing service to firm customers
(including an authorized return on rate base and associated taxes) are to be
received through fixed monthly reservation charges, which are not a function of
volumes transported, while including within the commodity billing component the
pipeline's variable operating costs. In addition, the adoption of Order 636 has
resulted in the incurrence of transition costs. However, Order 636 provides
mechanisms for the recovery of such costs within a reasonable time period.

ANR Pipeline placed its restructured services under Order 636 into effect on
November 1, 1993. The Company now offers a wide range of "unbundled"
transportation, storage, gathering and balancing services. In anticipation of
the competitive environment created by Order 636, the Company entered into a
number of firm, long-term storage and transportation contracts with customers.
As a result, the majority of the revenue the Company receives from storage and
transportation services is now derived from reservation charges associated with
these contracts. Over time this will provide a stable stream of revenue and
related cash flow for the Company.

As a result of Order 636, the Company no longer offers a merchant service.
Because of this, a significant portion of the Company's gas purchase contracts
have been bought out or assigned. The Company is continuing to negotiate the
termination of the remaining gas purchase contract obligations and believes it
will recover any costs associated with the resolution of these negotiations with
no significant financial impact. In 1994, gas sales revenues reflect amounts
related to the auctioning of gas in producing areas acquired under these
remaining gas purchase contracts, in addition to purchased gas adjustment
recoveries from customers associated with purchase periods prior to Order 636.
While operating revenues have been reduced as a result of the implementation of
Order 636, purchases and other related costs have also been reduced by a similar
amount, thereby having minimal net impact on earnings.

Prior to Order 636, for the period November 1, 1992 through October 31, 1993,
the Company operated under restructured sales services as part of the Interim
Settlement. Prior to the restructuring, the cost of providing transportation
services for sales customers was recovered as part of the Company's total resale
rate and, therefore, was classified as part of gas sales revenue. Under the
Interim Settlement, these costs were recovered through a separate "bundled"
storage and transportation rate and were included in storage and transportation
revenue.

F-3
<PAGE>

REVENUES. Storage and transportation revenues increased by 11% in 1994 as
compared to 1993. The primary factor contributing to the increase was revenues
associated with cost recovery mechanisms related to above market gas purchases
and certain transportation services provided by others, which were offset by
amounts included in cost of gas and operation and maintenance. Revenues have
been reduced in 1994 by provisions of $37.6 million for rate related
contingencies, associated with Docket No. RP94-43.

Storage and transportation revenues increased by 19% in 1993 as compared to
1992. The primary factors contributing to the increased revenue were the
recognition of $123.8 million of additional transportation revenue due to the
sales service restructuring discussed above, and the addition of 24.4 Bcf and
46.2 Bcf of new firm storage and firm transportation services contracted for,
effective April 1, and November 1, 1993, respectively. These factors were offset
by lower transportation commodity rates associated with the settlement of the
Company's 1989 rate case, a decrease in open access transportation volumes of 7%
which, in part, is the result of higher sales volumes transported during the
period. Also affecting revenues in 1992 was a restoration to income of $53.7
million associated with the settlement of the Company's 1989 rate case.

Gas sales revenues declined significantly in 1994 as compared to 1993 as a
result of the elimination of the Company's merchant service, as discussed above.
Gas sales revenues decreased by $31 million in 1993 as compared to 1992
primarily as a result of the sales service restructuring discussed above and
rate decreases associated with gas pricing. The decreases in 1993 were largely
offset by higher sales volumes resulting from sales customers purchasing gas for
storage injection during the spring and summer months. This purchase and storage
of gas by sales customers was in anticipation of the Company's implementation of
Order 636, and the fact that the Company would no longer provide a merchant
service effective November 1, 1993.

Other revenues increased in 1993, as compared to 1992, largely due to
additional revenue from investments in pipeline partnerships and an increase in
interest income.

COST OF GAS. Cost of gas significantly declined during 1994, as compared to
1993, as a result of the elimination of the Company's merchant service, as
discussed above. Cost of gas includes purchases required under certain remaining
gas purchase contracts and the amortization of purchased gas adjustment
recoveries from customers.

Cost of gas increased by $119.6 million in 1993 as compared to 1992 due to
higher sales volumes. This increase was partially offset by a decrease in the
average rate of the cost of gas purchased. Certain costs previously recorded as
a component of cost of gas sold, which are now included in transmission and
compression expense within operation and maintenance expenses as a result of the
Interim Settlement, also contributed to this decrease.

OPERATION AND MAINTENANCE. Operation and maintenance expenses decreased by
$17.8 million in 1994 as compared to 1993. This decrease was largely due to a
reduction in transportation services provided by others and lower costs
associated with maintenance of pipeline and compressor station facilities,
partially offset by increased benefit costs related to the required adoption of
FAS Nos. 106 and 112. Additionally, the variance includes a benefit in 1993
related to revisions of certain estimated costs.

Operation and maintenance expenses for 1993 approximated those of 1992,
although the following fluctuations were noted. Transportation services provided
by others increased in 1993 as described above, and storage expense increased
due to the addition of 42 Bcf of storage capacity provided by Blue Lake Gas
Storage Company commencing in April 1993. These increases were offset by the
benefit related to certain estimated costs mentioned above, which were recorded
in 1992.

DEPRECIATION. Depreciation expense increased by $3.9 million in 1994 as
compared to 1993, primarily due to an increase in plant balances. The decrease
in depreciation expense of $44.1 million in 1993 as compared to 1992 was caused
by a decrease in depreciation rates, which became effective November 1, 1992, as
a result of the Interim Settlement.

F-4
<PAGE>

INTEREST EXPENSE. Interest expense decreased by $7.3 million in 1993 as
compared to 1992 due to a lower effective interest rate and lower average
outstanding long-term debt, partially offset by a reduction in 1992 interest
expense associated with changes in provisions for regulatory matters.

TAXES ON INCOME. Income taxes increased by $3.3 million in 1993 as compared
to 1992 primarily due to an increase in pre-tax income and an increase in the
federal income tax rate from 34% to 35%, offset by certain adjustments to state
income tax accruals.

RECENT ADOPTION OF FASB PRONOUNCEMENT

The Company adopted FAS No. 112, effective January 1, 1994. The effects of
the changes required by FAS No. 112 are not material to the Company. For
additional information regarding this matter, see Note 10 of Notes to
Consolidated Financial Statements included herein.

F-5
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholder
ANR Pipeline Company
Detroit, Michigan

We have audited the accompanying consolidated balance sheets of ANR Pipeline
Company (an indirect, wholly-owned subsidiary of The Coastal Corporation) and
subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of earnings, retained earnings and cash flows for each of the three
years in the period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of ANR Pipeline Company and
subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.

As discussed in Note 10 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for postretirement benefits other than
pensions to conform with Statement of Financial Accounting Standards No. 106.

DELOITTE & TOUCHE LLP

Detroit, Michigan
February 2, 1995

F-6
<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<TABLE>
<CAPTION>

December 31,
------------------
1994 1993
-------- --------
<S> <C> <C>

ASSETS

Property, Plant and Equipment, at cost.... $3,421.3 $3,377.6
Less - Accumulated depreciation.......... 2,226.1 2,174.3
-------- --------
1,195.2 1,203.3
-------- --------

Current Assets:
Cash and cash equivalents................ 22.0 33.9
Note receivable from related party....... 235.2 285.5
Accounts receivable:
Others................................. 65.4 73.2
Related parties........................ 23.5 9.3
Materials and supplies, at average cost.. 41.1 40.6
Other.................................... .8 .7
-------- --------
388.0 443.2
-------- --------

Other Assets:
Assets related to excess gas supply...... 90.8 120.7
Investment in pipeline partnerships...... 41.2 37.5
Order 636 transition costs............... 39.9 20.2
Deferred charges and other............... 103.5 95.4
-------- --------
275.4 273.8
-------- --------

$1,858.6 $1,920.3
======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-7
<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<TABLE>
<CAPTION>

December 31,
-------------------
1994 1993
-------- ---------
<S> <C> <C>

STOCKHOLDERS' EQUITY AND LIABILITIES

Common Stock and Other Stockholder's Equity:
Common stock, $100 par value, authorized, issued and
outstanding 1,000 shares................................................. $ .1 $ .1
Additional paid-in capital................................................. 466.2 466.2
Retained earnings.......................................................... 322.2 503.0
-------- --------
788.5 969.3
-------- --------

Mandatory Redemption Cumulative Preferred Stock, $1 par value, authorized
10,000,000 shares, issued and outstanding 1,086,640 shares at
December 31, 1993........................................................ -- 26.0
-------- --------

Long-Term Debt and Capital Lease Obligations................................ 437.0 374.0
-------- --------

Current Liabilities:
Maturities and sinking fund requirements of long-term debt, capital lease
obligations and preferred stock.......................................... 61.1 10.7
Accounts payable:
Others................................................................... 168.8 194.0
Related parties.......................................................... 7.4 13.3
Taxes on income............................................................ 2.5 (16.4)
Other taxes................................................................ 23.9 24.0
Provision for regulatory matters........................................... 38.1 2.4
Other...................................................................... 28.6 25.9
-------- --------
330.4 253.9
-------- --------

Deferred Credits and Other:
Accumulated deferred income taxes.......................................... 230.1 217.7
Other...................................................................... 72.6 79.4
-------- --------
302.7 297.1
-------- --------

$1,858.6 $1,920.3
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.

F-8
<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED EARNINGS
(Millions of Dollars)
<TABLE>
<CAPTION>

Year Ended December 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Storage and transportation:
Others....................................... $ 689.0 $ 620.9 $ 515.5
Related parties.............................. 17.3 13.8 18.5
Gas sales:
Others....................................... 23.9 582.8 634.5
Related parties.............................. 82.2 20.7 --
Other revenues:
Others....................................... 12.1 17.5 7.6
Related parties.............................. 17.6 16.1 15.7
-------- -------- --------
842.1 1,271.8 1,191.8
-------- -------- --------

Costs and Expenses:
Operation and maintenance:
Others....................................... 277.3 299.8 314.0
Related parties.............................. 102.5 97.8 81.1
Cost of gas:
Others....................................... 108.6 469.0 403.5
Related parties.............................. 15.6 70.6 16.5
Depreciation................................... 50.5 46.6 90.7
Interest expense............................... 53.5 50.8 58.1
Taxes on income................................ 82.0 80.2 76.9
-------- -------- --------
690.0 1,114.8 1,040.8
-------- -------- --------

Net Earnings.................................... $ 152.1 $ 157.0 $ 151.0
======== ======== ========

</TABLE>

STATEMENT OF CONSOLIDATED RETAINED EARNINGS
(Millions of Dollars)
<TABLE>
<CAPTION>

Year Ended December 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Balance - Beginning of Year..................... $ 503.0 $ 383.7 $ 266.5

Net Earnings.................................... 152.1 157.0 151.0

Preferred Stock Redemption Premium Adjustment... (.3) -- --

Dividends:
Common stock................................... (331.0) (33.7) (28.6)
Preferred stock................................ (1.6) (4.0) (5.2)
-------- -------- --------

Balance - End of Year........................... $ 322.2 $ 503.0 $ 383.7
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-9
<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Millions of Dollars)
<TABLE>
<CAPTION>

Year Ended December 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings................................... $ 152.1 $ 157.0 $ 151.0
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation................................. 52.9 48.6 92.5
Increase in deferred income taxes............ 12.4 31.5 12.9
Increase (decrease) in provision for
regulatory matters.......................... 35.7 (4.5) (76.2)
Producer contract reformation cost recoveries 29.9 47.1 41.9
Provision for producer settlements........... - (5.1) 13.6
Equity in earnings of pipeline partnerships.. (5.3) (6.5) (3.1)
Changes in other assets and liabilities
affecting operating activities:
Decrease (increase) in accounts receivable:
Others...................................... 7.8 7.2 (39.0)
Related parties............................. (14.2) 8.9 (4.5)
Decrease (increase) in gas in underground
storage..................................... - 67.4 ( 30.9)
Increase (decrease) in accounts payable and
other accruals:
Others..................................... 11.6 (56.0) 65.1
Related parties............................ (5.9) (17.6) 19.6
Net (decrease) increase in other
assets/liabilities.......................... (32.8) (31.1) 9.3
-------- -------- --------
Total adjustments.......................... 92.1 89.9 101.2
-------- -------- --------
Net cash provided by operating activities.. 244.2 246.9 252.2
-------- -------- --------
Cash Flows from Investing Activities:
Decrease (increase) in note receivable from
related party................................. 50.3 (58.0) (4.9)
Gas supply settlements and prepayments......... - (4.3) (41.4)
Recovery of gas supply prepayments............. .3 24.9 4.4
Capital expenditures........................... (62.0) (49.4) (112.0)
-------- -------- --------
Net cash used in investing activities...... (11.4) (86.8) (153.9)
-------- -------- --------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt....... 125.0 - -
Retirement of long-term debt and capital lease
obligations................................... (2.9) (81.3) (52.2)
Redemptions and early retirement of preferred
stock......................................... (34.0) (10.2) ( 12.2)
Common stock dividends paid.................... (331.0) (33.7) (28.6)
Preferred stock dividends paid................. (1.8) (4.1) (5.5)
-------- -------- --------
Net cash used in financing activities...... (244.7) (129.3) (98.5)
-------- -------- --------
Net (Decrease) Increase in Cash and Cash
Equivalents.................................... (11.9) 30.8 (.2)

Cash and Cash Equivalents at Beginning of Period 33.9 3.1 3.3
-------- -------- --------
Cash and Cash Equivalents at End of Period...... $ 22.0 $ 33.9 $ 3.1
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-10
<PAGE>

ANR PIPELINE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

- - Basis of Presentation

ANR Pipeline is a subsidiary of ANR, which is a direct subsidiary of Coastal
Natural Gas and an indirect subsidiary of Coastal. The financial statements
presented herewith are presented on the basis of historical cost and do not
reflect the basis of cost to Coastal Natural Gas.

The Company is subject to the regulations and accounting procedures of the
FERC. The Company meets the criteria and, accordingly, follows the accounting
and reporting requirements of FAS No. 71, "Accounting for the Effects of Certain
Types of Regulation."

- - Reclassifications

Gas in underground storage of $207.5 million was reclassified to "Property,
Plant and Equipment" as of December 31, 1993. The reclassification of these
costs reflect the fact that, effective November 1, 1993, the Company no longer
provides a merchant function and that under the Order 636 environment, these
costs are now considered an investment needed solely for use in facilitating the
overall operations of the Company's pipeline system. Certain other
reclassifications of prior period statements have been made to conform with
current reporting practices. The effect of these reclassifications was not
material to the Company's consolidated financial position or results of
operations.

- - Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, after eliminating all significant intercompany
transactions. The equity method of accounting is used for investments in which
the Company has a 20% to 50% continuing interest. The cost method of accounting
is used for an investment in which the Company has less than a 20% continuing
interest.

- - Depreciation of Gas Plant

The Company's annual provisions for depreciation of gas plant are computed on
a straight-line basis using rates of depreciation which vary by type of
property. The annual composite depreciation rates for 1994, 1993 and 1992 were
approximately 1.7%, 1.6% and 3.1%, respectively. The decrease in the annual
composite depreciation rate for 1993 resulted from provisions of the Interim
Settlement which reduced depreciation rates effective November 1, 1992. The
resulting reduction in depreciation expense of $44.1 million was offset by a
corresponding decrease in revenues collected from customers. The determination
of book depreciation useful lives and the resulting depreciation rates are
consistent with the policies and practices normally followed under generally
accepted accounting principles. A calculation of the cumulative effect on
recorded depreciation resulting from the use of recovery periods for regulatory
purposes different from the estimated useful lives absent regulation has not
been prepared.

Costs of minor property units (or components thereof) retired or abandoned
are charged or credited, net of salvage, to accumulated depreciation. Gain or
loss on sales of major property units is credited or charged to income.

- - Income Taxes

The Company is a member of a consolidated group which files a consolidated
federal income tax return. Members of the consolidated group with taxable
incomes are charged with the amount of income taxes as if they filed separate
federal income tax returns, and members providing deductions and credits which
result in income tax savings are allocated credits for such savings.

F-11
<PAGE>

- - Statement of Cash Flows

For purposes of these financial statements, cash equivalents include time
deposits, certificates of deposit and all highly liquid instruments with
original maturities of three months or less. The Company made cash payments for
interest, net of interest capitalized, of $50.2 million, $53.0 million and $68.3
million in 1994, 1993 and 1992, respectively. Cash payments for income taxes
amounted to $54.9 million, $103.2 million and $104.1 million in 1994, 1993 and
1992, respectively.

- - Allowance for Funds Used During Construction

In accordance with the accounting requirements of the FERC, an allowance for
equity and borrowed funds used during construction is included in the cost of
the Company's major additions to gas plant. These costs amounted to $1.2
million, $1.5 million and $3.9 million in 1994, 1993 and 1992, respectively.

- - Currency Swaps

The Company has entered into foreign currency swap agreements to manage its
foreign exchange exposure on its outstanding bonds for 125 million Swiss francs
which mature in October 1995. Costs associated with these swaps were fixed at
the date of issuance and are being amortized over the life of the related debt
issuance. Gains or losses from foreign currency swaps are deferred and
recognized as payments are made on the related foreign currency denominated
debt. Such gains or losses are essentially offset by gains or losses on the
related debt.

- - Concentrations of Credit Risk

The Company's primary market areas are located in the Midwest region of the
United States. The Company has a concentration of receivables due from
interstate pipelines, intrastate pipelines and local distribution companies in
these market areas. These concentrations of customers may affect the Company's
overall credit risk in that the customers may be similarly affected by changes
in economic, regulatory and other factors. Trade receivables are generally not
collateralized; however, the Company analyzes customers' credit positions prior
to extending credit.

2. Common Stock and Other Stockholder's Equity

All of ANR Pipeline's common stock is owned by ANR.

Under the terms of the most restrictive of the Company's financing
agreements, approximately $166 million was available at December 31, 1994 for
payment of dividends on the Company's common stock.

3. Mandatory Redemption Cumulative Preferred Stock

On June 16, 1994, the Company redeemed all outstanding shares of its
Cumulative Preferred Stock. Of the 800,000 outstanding shares of the publicly
held $2.12 Series, 200,000 shares were redeemed under sinking fund provisions at
$25.00 per share, and 600,000 shares were redeemed under optional redemption
provisions at $25.318 per share. Of the 200,000 outstanding shares of the
publicly held $2.675 Series, all shares were redeemed under sinking fund
provisions at $25.00 per share. Of the 86,640 outstanding shares of the
privately held $12.00 Series, all shares were redeemed under optional redemption
provisions at $103.79 per share. Redemption of these series included the payment
of accrued dividends to June 16, 1994. A $328,000 premium paid in excess of par
value to redeem the remaining outstanding preferred stock was charged directly
to retained earnings in accordance with FERC accounting procedures.

F-12
<PAGE>

4. Long-Term Debt

Balances at December 31 were as follows (millions of dollars):

1994 1993
------ ------
<S> <C> <C>
Debentures:
9-5/8% series due 2021....................................... $300.0 $300.0
7-3/8% series due 2024....................................... 125.0 --

Unsecured Debt:
Swiss Franc Bonds due 1995*.................................. 58.1 58.1
Unamortized discount related to outstanding debt, net of
premium...................................................... (2.4) (1.5)
------ ------
480.7 356.6

Less maturities............................................... 58.1 --
------ ------

$422.6 $356.6
====== ======
</TABLE>

* In October 1985, the Company issued 6% bonds for 125 million Swiss francs
at a price of 100.25%. The foreign currency exposure resulting from the
issue has been contractually hedged through two currency swap agreements,
resulting in an effective borrowing cost of approximately 10.7%. Neither
the Company nor the counterparties are required to collateralize their
respective obligations under these swaps. In the event of nonperformance by
the counterparties to the currency swaps, the Company would have possible
exposure to credit loss in the amount of $39.5 million as of December 31,
1994. However, the Company has largely mitigated the risk of such a loss
occurring by limiting the counterparties of these agreements to a prominent
international bank and a prominent international financial institution.

Maturities of long-term debt during the succeeding five years are as follows
(millions of dollars):

1995.................... $58.1
1996.................... -
1997.................... -
1998.................... -
1999.................... -

Alternatives to finance additional capital and other expenditures are limited
principally by the terms of certain debt instruments of the Company and certain
affiliates. Under the most restrictive of such instruments, as of December 31,
1994, ANR Pipeline and certain affiliates could incur in the aggregate
approximately $770 million of additional indebtedness. For the Company and these
affiliates to incur indebtedness for borrowed money in excess of this amount,
approximately $350 million of indebtedness of Coastal Natural Gas would need to
be retired.

5. Value of Financial Instruments

The estimated fair value amounts of the Company's financial instruments have
been determined by the Company, using appropriate market information and
valuation methodologies. Considerable judgment is required to develop the
estimates of fair value, thus, the estimates provided herein are not necessarily
indicative of the amounts that could be realized in a current market exchange.

F-13
<PAGE>

<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
-------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- --------
(Millions of dollars)
<S> <C> <C> <C> <C>
Nonderivatives:
Financial assets:
Cash and cash equivalents............... $ 22.0 $ 22.0 $ 33.9 $ 33.9
Marketable security of a related party.. 2.0 2.1 2.0 2.2
Note receivable from a related party.... 235.2 235.2 285.5 285.5

Financial liabilities:
Long-term debt.......................... 522.6 511.4 390.2 451.0
Mandatory redemption cumulative
preferred stock........................ - - 33.7 34.3

Derivatives relating to long-term debt:
Foreign currency swap gains............... (39.5) (39.5) (32.1) (32.1)

</TABLE>

The estimated fair value of the marketable security of a related party is
based on market quotes at December 31, 1994 and 1993, respectively, and is
included under "Deferred Charges and Other Assets." The note receivable from a
related party is at a floating market rate of interest and therefore, the
carrying amount is a reasonable estimate of its fair value. The estimated values
of the Company's long-term debt and mandatory redemption cumulative preferred
stock are based on interest rates at December 31, 1994 and 1993, respectively,
for new issues with similar remaining maturities. The fair market values of the
Company's foreign currency swaps are based on the estimated termination values
at December 31, 1994 and 1993, respectively.

6. Take-or-Pay Obligations

"Assets related to excess gas supply" consists of $90.8 million and $120.7
million at December 31, 1994 and 1993, respectively, relating to prepayments for
gas under gas purchase contracts with producers and settlement payment amounts
relative to the restructuring of gas purchase contracts as negotiated with
producers. Currently, FERC regulations allow for the billing of a portion of the
costs of take-or-pay settlements and renegotiating gas purchase contracts.
Prepayments are normally recoupable through future deliveries of natural gas.

Contract reformation costs incurred as a result of the mandated Order 636
restructuring will be recovered under the transition cost mechanisms of Order
636, as well as through negotiated agreements with the Company's customers. The
Company believes that these mechanisms provide adequate coverage for such costs.

Several producers have instituted litigation arising out of take-or-pay
claims against the Company. In the Company's experience, producers' claims are
generally vastly overstated and do not consider all adjustments provided for in
the contract or allowed by law. The Company has resolved the majority of the
exposure with its suppliers for approximately 13% of the amounts claimed. At
December 31, 1994, the Company estimated that unresolved asserted and unasserted
producers' claims amounted to approximately $2 million. The remaining disputes
will be settled where possible and litigated if settlement is not possible.

At December 31, 1994, the Company was committed to make future purchases
under certain take-or-pay contracts with fixed, minimum or escalating price
provisions. Based on contracts in effect at that date, and before considering
reductions provided in the contracts or applicable law, such commitments are
estimated to be $21 million, $17 million and $10 million for each of the years
1995 through 1997, respectively, and $1 million thereafter. Such commitments
have also not been adjusted for all amounts which may be assigned or released,
or for the results of future litigation or negotiation with producers.

F-14
<PAGE>

The Company has made provisions, which it believes are adequate, for payments
to producers that may be required for settlement of take-or-pay claims and
restructuring of future contractual commitments. In determining the net loss
relating to such provisions, the Company has also made accruals for the
estimated portion of such payments which would be recoverable pursuant to FERC-
approved settlements with customers. Such provisions and accruals were not
material to the Company for the years 1994, 1993 and 1992.

7. Litigation, Environmental and Regulatory Matters

- - Litigation

- - Environmental

The Company's operations are subject to extensive and evolving federal, state
and local environmental laws and regulations which may affect such operations
and costs as a result of their effect on the construction, operation and
maintenance of its pipeline facilities. The Company anticipates annual capital
expenditures of $2 million over the next several years aimed at maintaining
compliance with such laws and regulations. Additionally, appropriate
governmental authorities may enforce the laws and regulations with a variety of
civil and criminal enforcement measures, including monetary penalties and
remediation requirements.

- - Regulatory Matters

F-15
<PAGE>

February 1995, the FERC has directed the Company to make immediate refunds of
$45.1 million and applicable interest, subject to further investigation of the
claims which the customers have made. The matter is still pending.

On April 8, 1992, the FERC issued Order 636, which required significant
changes in the services provided by interstate natural gas pipelines. The
Company and numerous other parties have sought judicial review of aspects of
Order 636. The case is currently in the briefing phase before the United States
Court of Appeals for the D.C. Circuit. ANR Pipeline placed its restructured
services under Order 636 into effect on November 1, 1993. As a result, the
Company no longer provides a merchant service and now offers a wide range of
"unbundled" transportation, storage and balancing services. However, the Company
still purchases a residual quantity of gas under certain remaining gas purchase
contracts. The Company's Order 636 restructured tariff provides a transitional
mechanism for the purpose of recovering from, or refunding to, its customers any
pricing differential between costs incurred to purchase this gas and the amount
the Company recovers through the auctioning of such gas on the open market in
producing areas. Several persons, including ANR Pipeline, have sought judicial
review of aspects of the FERC's orders approving the Company's restructuring
filings. Those appeals have been held in abeyance by the United States Court of
Appeals for the D.C. Circuit, pending further order. On March 24, 1994, the FERC
issued its "Fourth Order on Compliance Filing and Third Order on Rehearing,"
which addressed numerous rehearing issues and confirmed that after minor
required tariff modifications, the Company is now fully in compliance with Order
636 and the requirements of the orders on ANR Pipeline's restructuring filings.
The FERC issued a further order regarding certain compliance issues on July 1,
1994. In accordance with this order, the Company filed revised tariff sheets on
July 18, 1994.

F-16
<PAGE>

Company believes the ultimate resolution of the Dakota related issues will not
have a material adverse impact on its consolidated financial position or results
of operations.

8. Lease Commitments

The Company is the lessee of eight storage fields under capital leases. The
storage field leases were to expire on May 1, 1998. However, the Company has the
option to extend each of the leases for up to three successive five-year
periods. On April 27, 1993, the Company exercised the first of these three
successive and separate options, extending the current storage field leases to
May 1, 2003. The net present value of the future minimum lease payments is
included as part of "Property, Plant and Equipment" in the Company's
Consolidated Balance Sheet as follows (millions of dollars):

December 31,
--------------
1994 1993
------ ------
<S> <C> <C>

Storage property................. $121.9 $121.9
Less: Accumulated depreciation.. 104.5 101.5
------ ------

$ 17.4 $ 20.4
====== ======
</TABLE>

The annual provision for depreciation included as a part of depreciation
expense was $3.0 million for 1994 and 1993, and $4.7 million for 1992.

F-17
<PAGE>

Future minimum lease payments under capital leases together with the present
value of the net minimum lease payments as of December 31, 1994 are as follows
(millions of dollars):

Year ending December 31:
<S> <C>
1995......................................... $ 9.8
1996......................................... 9.3
1997......................................... 8.8
1998......................................... 8.1
1999......................................... 7.6
2000 through 2003............................ 17.5
-----
Total minimum lease payments................. 61.1

Less: Amount representing executory costs... 16.7
-----

Net minimum lease payments................... 44.4

Less: Amount representing interest.......... 27.0
-----

Present value of net minimum lease payments.. $17.4
=====
</TABLE>

Operating lease rentals included in operating expenses totaled $13.7 million
for 1994, $16.2 million for 1993 and $16.4 million for 1992. Aggregate minimum
lease payments under existing noncapitalized, long-term leases are approximately
$14.0 million for each of the years 1995 through 1999, and $117.6 million
thereafter.

9. Taxes On Income

Provisions for income taxes are composed of the following (millions of
dollars):

Year Ended December 31,
------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Federal:
Currently payable........................ $ 85.6 $ 62.0 $ 87.6
Deferred................................. (8.1) 14.5 (17.6)
------ ------ ------
77.5 76.5 70.0
------ ------ ------
State and City:
Currently payable........................ 5.2 2.1 8.1
Deferred................................. (.7) 1.6 (1.2)
------ ------ ------
4.5 3.7 6.9
------ ------ ------

Total income taxes...................... $ 82.0 $ 80.2 $ 76.9
====== ====== ======
</TABLE>

Provisions for income taxes were different from the amount computed by
applying the statutory U.S. federal income tax rate to earnings before tax. The
reasons for these differences are (millions of dollars):

Year Ended December 31,
------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Tax expense computed by applying the
U.S. federal income tax rate of 35%
for 1994 and 1993 and 34% for 1992.... $ 81.9 $ 83.0 $ 77.5

Increases (reductions) in taxes
resulting from:
State and city income taxes reduced
by federal income tax benefit...... 2.9 2.4 4.6
Normalization adjustment for
liberalized depreciation........... (2.8) (4.8) (4.8)
Other................................. - (.4) (.4)
------ ------ ------
Taxes on income.................... $ 82.0 $ 80.2 $ 76.9
====== ====== ======
</TABLE>

F-18
<PAGE>

Deferred tax liabilities (assets) which are recognized for the estimated
future tax effects attributable to temporary differences are (millions of
dollars):

December 31,
--------------
1994 1993
------ ------
<S> <C> <C>

Depreciation............................... $162.8 $156.3
Purchased gas and other recoverable costs.. 53.5 53.2
Other...................................... 15.4 15.2
------ ------
Deferred tax liabilities.................. 231.7 224.7
------ ------

Provision for regulatory matters........... (14.6) (.8)
Inventory capitalization................... (1.6) (8.0)
Benefit plans and accrued expenses......... (8.0) (8.3)
Other...................................... (10.0) (5.7)
------ ------
Deferred tax assets....................... (34.2) (22.8)
------ ------

Deferred income taxes..................... $197.5 $201.9
====== ======
</TABLE>

The Coastal consolidated federal income tax returns for the years 1985
through 1987 have been examined by the Internal Revenue Service. The examination
did not result in any significant adjustments to the Company's portion of these
returns. Examination of such consolidated federal income tax returns for 1988,
1989 and 1990 is currently in progress. It is the opinion of management that
adequate provisions for federal income taxes have been reflected in the
Company's consolidated financial statements.

10. Benefit Plans

The Company participates with its affiliates in the non-contributory pension
plan of Coastal (the "Plan") which covers substantially all employees. The Plan
provides benefits based on final average monthly compensation and years of
service. As of December 31, 1994, the Plan did not have an unfunded accumulated
benefit obligation. ANR Pipeline made no contributions to the Plan for 1994,
1993 or 1992. Assets of the Plan are not segregated or restricted by its
participating subsidiaries and pension obligations for Company employees would
remain the obligation of the Plan if the Company were to withdraw.

ANR Pipeline also makes contributions to a thrift plan, which is a trusteed,
voluntary and contributory plan for eligible employees of the Company. The
Company's contributions, which are based on matching employee contributions,
amounted to $6.3 million, $5.9 million and $5.7 million for 1994, 1993 and 1992,
respectively.

The Company provides certain health care and life insurance benefits for
substantially all of its retired employees. Effective January 1, 1993, the
Company adopted FAS No. 106, which requires the Company to accrue the estimated
cost of retiree benefit payments during the years the employee provides
services. The Company previously expensed the cost of these benefits, which are
principally health care, as claims were incurred. FAS No. 106 allows recognition
of the cumulative effect of the liability in the year of the adoption or the
amortization of the obligation over a period of up to 20 years. The Company has
elected to recognize the initial postretirement benefit obligation of
approximately $62.7 million over a period of 20 years. In accordance with a FERC
policy statement issued on December 17, 1992 (the "Policy Statement"), pipeline
companies are allowed to defer the difference between the costs of
postretirement benefits determined in accordance with FAS No. 106 and those
costs currently recovered through their rates. The Company deferred such costs
for the period January 1993 through April 1994 and began recovering them over a
three-year period effective May 1, 1994, subject to FERC approval, pursuant to
provisions of its November 1, 1993 general rate case filing. As of December 31,
1994, the unamortized balance of these deferred costs is $5.7 million. In
addition, pursuant to the Policy Statement, the Company has funded approximately
$13.7 million of FAS No. 106 costs through December 31, 1994.

F-19
<PAGE>

The following tables set forth the accumulated postretirement benefit
obligation recognized in the Company's Consolidated Balance Sheet and the
benefit cost for the years ended December 31, 1994 and 1993 (millions of
dollars):

1994 1993
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation:

Retirees................................................ ($40.8) ($55.6)
Fully eligible plan participants........................ (2.1) (6.3)
Other active plan participants.......................... (8.9) (7.1)
------- ------
(51.8) (69.0)

Plan assets at fair value................................ 11.0 -
------- ------

Accumulated postretirement benefit obligation in excess
of plan assets.......................................... (40.8) (69.0)
Unrecognized net transition obligation................... 56.3 59.6
Unrecognized net (gain) loss from past experience
different from that assumed............................. (15.1) 2.9
------ ------

Postretirement benefit prepayment (obligation) included
in Consolidated Balance Sheet........................... $ .4 ($6.5)
======= ======

Year Ended
December 31,
---------------
1994 1993
------ ------

Net periodic postretirement benefit cost consisted of the
following components:

Service cost - benefits earned during the period....... $ .5 $ .4
Interest cost on accumulated postretirement benefit
obligation............................................ 4.2 5.0
Amortization of transition obligation.................. 3.1 3.1
Other amortization amounts............................. (.4) -
------ ------
Net periodic postretirement benefit cost............... 7.4 8.5
Net increase in deferred regulatory asset.............. (1.1) (6.5)
Amortization of regulatory asset....................... 1.9 -
------ ------
Net postretirement benefit cost recognized in Statement
of Consolidated Earnings.............................. $ 8.2 $ 2.0
====== ======
</TABLE>

The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 12% in 1994, declining gradually to 6% by
the year 2005. The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 16% in 1993. A one percentage
point increase in the assumed health care cost trend rate for each year would
increase the accumulated postretirement benefit obligation as of December 31,
1994 and the net postretirement health care cost by approximately 6%. The
assumed discount rate used in determining the accumulated postretirement benefit
obligation was 8.75%.

The Company adopted FAS No. 112, effective January 1, 1994. This standard
covers the accounting for estimated costs of benefits provided to former or
inactive employees before their retirement. As a result of adopting the
provisions of FAS No. 112, the Company recognized an additional liability of
$6.4 million, which has been deferred. Of these deferred costs, $3 million is
currently being recovered over a three-year period pursuant to the Company's
general rate case filing, effective May 1, 1994, subject to FERC approval. The
Company will seek to recover the remaining deferred costs in future rate
filings, as applicable.

F-20
<PAGE>

11. Transactions with Major Customers and Related Parties

- - Major Customers:

The Statement of Consolidated Earnings includes revenues from major customers
as follows (millions of dollars):

1994 1993 1992
----------------- ----------------- -----------------
Percent Percent Percent
Amount of Total Amount of Total Amount of Total
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>

Wisconsin Gas Company.............. $100.8 12.0% $223.0 17.5% $197.7 16.6%
Michigan Consolidated Gas Company.. 65.7 7.8 241.7 19.0 243.8 20.5

</TABLE>

- - Related Parties:

"Operation and Maintenance" expenses within the Statement of Consolidated
Earnings includes affiliate and other related party transactions as follows
(millions of dollars):

1994 1993 1992
----- ----- -----
<S> <C> <C> <C>

Storage and transportation expense - affiliates............. $20.9 $25.6 $25.5
Storage and transportation expense - other related parties.. 39.9 31.9 13.3
Services provided at cost - affiliates...................... 26.8 23.8 23.9
Facilities rental expense - affiliates...................... 14.9 16.5 18.4

</TABLE>

Services provided by the Company at cost for affiliated companies were $9.9
million for 1994, $10.1 million for 1993 and $10.4 million for 1992. The
services provided by the Company to affiliates, and by affiliates to the
Company, primarily reflect the allocation of costs relating to the sharing of
facilities and general and administrative functions, characteristic of group
operations. Such costs are allocated using a three-factor formula consisting of
revenues, property and payroll, which is reasonable and has been applied on a
consistent basis.

The Company has lease agreements with Coastal and its affiliates for the
rental of office space and certain pipeline facilities. One such lease with
Coastal, for pipeline facilities, was terminated during 1994 in conjunction with
the terms of the lease.

F-21
<PAGE>

12. Quarterly Results of Operations (Unaudited)

The results of operations by quarter for the years ended December 31, 1994
and 1993 were (millions of dollars):

1994 Quarter Ended
----------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
--------- -------- --------- --------
<S> <C> <C> <C> <C>

Revenues*................... $244.4 $202.6 $197.5 $197.6
Cost of gas*................ 40.3 31.5 26.9 25.5
------ ------ ------ ------
Revenues less cost of gas.. 204.1 171.1 170.6 172.1
Other costs and expenses.... 155.5 127.8 144.2 138.3
------ ------ ------ ------
Net earnings............... $ 48.6 $ 43.3 $ 26.4 $ 33.8
====== ====== ====== ======

1993 Quarter Ended
---------------------------------------
March 31, June 30, Sept. 30, Dec. 31,
--------- -------- --------- --------

Revenues.................... $362.1 $337.6 $303.9 $268.2
Cost of gas................. 176.0 157.7 121.0 84.9
------ ------ ------ ------
Revenues less cost of gas.. 186.1 179.9 182.9 183.3
Other costs and expenses.... 136.4 142.9 151.8 144.1
------ ------ ------ ------
Net earnings............... $ 49.7 $ 37.0 $ 31.1 $ 39.2
====== ====== ====== ======
</TABLE>
* The quarter ended September 30, 1994, has been restated to exclude
transportation imbalance activity in the amount of $33.1 million from both
"Revenues" and "Cost of gas." Such activity is now accounted for on a net
basis.

F-22
<PAGE>

EXHIBIT INDEX

Exhibit
Number Document
- ------ --------
(3.1)+ Composite Certificate of Incorporation of ANR Pipeline effective as of
December 31, 1987 (Filed as Module ANRCertIncorp on March 29, 1994).

(3.2)* Amended By-laws of ANR Pipeline effective as of September 21, 1994.

(4) With respect to instruments defining the rights of holders of
long-term debt, the Company will furnish to the Securities and
Exchange Commission any such document on request.

(4.1)+ Board Resolution dated September 22, 1975 establishing the $2.675
Series of Cumulative Preferred Stock (Filed as Module
BoardRes_092275 on March 29, 1994).

(4.2)+ Board Resolution dated October 26, 1976 establishing the $2.12 Series
of Cumulative Preferred Stock (Filed as Module BoardRes_102676
on March 29, 1994).

(4.3)+ Board Resolution dated May 12, 1980 establishing the $12.00 Series of
Cumulative Preferred Stock (Filed as Module BoardRes_051280 on
March 29, 1994).

(4.4)+ Indenture dated as of February 15, 1994 and First Supplemental
Indenture dated as of February 15, 1994 for the $125 million of 7-3/8%
Debentures due February 15, 2024. (Filed as Exhibit 4.4 to ANR
Pipeline's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.)

(10.1)+ Form of Employment Agreement between ANR Pipeline and certain of its
executive officers (Filed as a Module ANREmployAgree on March 29,
1994).

(10.2)+ Form of Employment Agreement between Coastal and certain Company
executive officers (Filed as Module TCCEmployAgree on March 29, 1994).

(21)* Subsidiaries of the Company.

(23)* Consent of Deloitte & Touche LLP.

(24)* Power of Attorney (included on signature pages herein).

(27)* Financial Data Schedule.

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

Note:

+ Indicates documents incorporated by reference from the prior filings
indicated.
* Indicates documents filed herewith.

<PAGE>

Exhibit 3.2

AMENDED AND RESTATED
BY-LAWS
OF
ANR PIPELINE COMPANY
September 21, 1994
<PAGE>

BY-LAWS

ANR PIPELINE COMPANY

A Delaware Corporation

_______________________

ARTICLE I

OFFICES

SECTION 1.1 Registered Office and Agent. The registered office of the
---------------------------
corporation in the State of Delaware shall be in Wilmington, Delaware. The name
of the registered agent is the Corporation Trust Company.

SECTION 1.2 Other Offices. The Corporation may also have offices at such
-------------
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.

ARTICLE II

MEETINGS OF SHAREHOLDERS

SECTION 2.1 Annual Meetings. The annual meetings of the stockholders for
---------------
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place, date and hour as
shall be designated in the notice thereof.

SECTION 2.2 Special Meetings. Except as otherwise prescribed by law,
----------------
special meetings of the stockholders, for any purpose or purposes, may be called
by the Chairman, or in his absence by the President, or by the Secretary at the
request of the Board of Directors. The notice of the special meeting shall
state the time, place and purposes of the proposed special meeting. Business
transacted at a special meeting shall be confined to the purposes stated in the
notice.

SECTION 2.3 Place of Meetings. Each meeting of the stockholders for the
-----------------
election of Directors shall be held at the principal office of the corporation
in Detroit, Michigan, unless the Board of Directors shall by resolution
designate any other place, within or without the State of Delaware, as the place
of such meeting. Meetings of stockholders for any other purpose may be held at
any such place, within or without the State of Delaware, and at such time as
shall be stated in the notice of the meeting, or in a duly executed waiver
thereof.

SECTION 2.4 Notice of Meetings. Except as otherwise provided by law,
------------------
written notice of the time, place and, in case of a special meeting, the purpose
or purposes for which the meeting is called, shall be given not less than ten
nor more than sixty days before the date of the meeting to each stockholder of
record entitled to vote at the meeting.

SECTION 2.5 Stockholder List. At least ten days before every meeting of
----------------
stockholders, the officer of agent having charge of the stock transfer books
shall prepare a complete list of the stockholders entitled to vote at said
meeting, arranged in alphabetical order, with the address of, and number of
shares registered in the name of each. Such list shall be open to examination
of any stockholder during ordinary business hours, for any purpose

<PAGE>

germane to the meeting, for a period of at least ten days prior to the meeting,
either at a place in the city where such meeting shall be held, which place
shall be specified in the notice of meeting or, if not so specified, at the
place where the meeting is to be held; and the list shall be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any such stockholder who may be present.

SECTION 2.6 Quorum. The holders of a majority of the stock issued and
------
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite for, and shall constitute, a quorum at all meetings of
the stockholders of the corporation for the transaction of business, except as
otherwise provided by law or these By-Laws.

SECTION 2.7 Proxies. At every meeting of stockholders, each stockholder
-------
has the right to vote in person or by proxy. Such proxy shall be appointed by
an instrument in writing subscribed by the stockholder or his authorized agent
or representative, and bearing a date not more than three (3) years prior to
such meeting, unless the proxy provides for a longer period. Each proxy shall
be filed with the Secretary of the corporation prior to or at the time of the
meeting.

SECTION 2.8 Voting. Each outstanding share is entitled to one vote on
------
each matter submitted to a vote unless otherwise provided in the Certificate of
Incorporation. When a quorum is present at any meeting of the stockholders, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by provision of law or these By-
Laws, a different vote is required, in which case such provision shall govern
and control the decision of such question. Directors of the corporation shall
be elected by a plurality of the votes cast at an election.

SECTION 2.9 Voting of Certain Shares. Shares standing in the name of
------------------------
another corporation, domestic or foreign, and entitled to vote may be voted by
such officer, agent, or proxy as the by-laws of such corporation may prescribe,
or, in the absence of such provision, as the Board of Directors of such
corporation may determine.

SECTION 2.10 Action Without Meeting. Any action required or permitted to
----------------------
be taken at any annual or special meeting of stockholders of the corporation may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or to take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Such consent
shall be filed with the minutes of the proceedings of the stockholders. Prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.

SECTION 2.11 Presiding Officers. The Chairman, or in his absence, the
------------------
President, shall call the meeting of the stockholders to order and shall act as
chairman thereof. In the absence of both the Chairman and the President, the
stockholders present at the meeting shall elect a chairman. The Secretary shall
act as a secretary of all meetings of stockholders. In the absence of the
Secretary at any meeting of stockholders, the presiding officer may appoint any
person to act as secretary of the meeting.

ARTICLE III

BOARD OF DIRECTORS

SECTION 3.1 Management Responsibility. The business and affairs of the
-------------------------
corporation shall be managed by the Board of Directors except as otherwise
provided by law or by the Certificate of Incorporation.

SECTION 3.2 Number; Elections; Term. The Board of Directors of the
-----------------------
Corporation shall be not less than three (3) members, as determined from time to
time by the Board of Directors of the Corporation. Each director shall hold
office until the next annual meeting of stockholders and until his successor
shall have been elected and qualified.

-2-
<PAGE>

SECTION 3.3 Resignation and Vacancies. Any Director may resign at any
-------------------------
time by giving written notice to the corporation. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein, and, unless otherwise specified therein the acceptance of
such resignation shall not be necessary to make it effective. Any vacancy
occurring in the Board of Directors may be filled by an affirmative vote of a
majority of the remaining Directors even though less than a quorum of the Board
of Directors, or by the sole remaining Director. A directorship to be filled
because of an increase in the number of Directors to fill a vacancy may be
filled by the Board for a term of office continuing only until the next election
of Directors by the stockholders.

SECTION 3.4 Regular Meetings. A regular meeting of the Board of Directors
----------------
shall be held as soon as practicable after the annual meeting of stockholders
without further notice. The Board of Directors may provide, by resolution, the
time and place for the holding of additional regular meetings without other
notice than such resolution.

SECTION 3.5 Special Meetings. Special meetings of the Board of Directors
----------------
may be called and the time and place thereof designated by the Chairman or the
President. Except as otherwise provided by law, written notice of the time and
place of such special meeting of the Board of Directors shall be given at least
two days prior to the time of holding the meeting. The attendance of a Director
at any meeting shall constitute a waiver of notice of such meeting, except where
a Director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
special meeting of the Board of Directors need be specified in any notice or
waiver of notice of such meeting except that notice shall be given of any
proposed amendment to the By-Laws or with respect to any other matter where
notice is required by law.

SECTION 3.6 Quorum. A majority of the Directors in office, or a majority
------
of the Directors constituting any committee of the Board of Directors, shall
constitute a quorum of the Board of Directors, or of such committee, as the case
may be, for the transaction of business; but if at any meeting of the Board of
Directors, or of any committee thereof, there shall be less than a quorum
present, a majority of those present may adjourn the meeting from time to time.
The act of the majority of the members of the Board of Directors or of the
members of any committee thereof present at any meeting of the Board or of any
such committee at which a quorum is present constitutes the action of the Board
of Directors or of such committee.

SECTION 3.7 Action Without Meeting. Any action required or permitted to
----------------------
be taken at any meeting of the Board of Directors, or of any committee of the
Board, may be taken without a meeting if a written consent thereto is signed by
all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee. Such consent shall have the same effect as a vote of the Board or
committee for all purposes.

SECTION 3.8 Committees of Directors. The corporation may have committees
-----------------------
of Directors as hereinafter provided:

(a) The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each such committee to
consist of two or more directors selected by the Board of Directors.
Except as otherwise expressly provided by the laws of the state of
Delaware, each such committee shall have and may exercise such powers and
authority as the Board of Directors may in its sole and absolute discretion
delegate. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board of
Directors.

(b) Each committee provided for by this Section 3.8 shall fix its own
rules of procedure, meet at such times and places and upon such call or
notice as shall be provided by such rules, keep a record (including written
minutes) of its meetings, and report orally or in writing all action taken
by the committees at the next regular meeting of the Board of Directors.
Rules of procedure fixed by each

-3-
<PAGE>

committee shall be consistent with the laws of the state of Delaware, the
Certificate of Incorporation, and these By-laws.

(c) The business of each committee shall be transacted by a quorum of
the committee as more fully provided in Section 3.6, or as provided in
Section 3.7 of these By-Laws.

(d) Each member of each committee provided for by this Section 3.8 of
these By-Laws shall hold office until the meeting of the Board of Directors
next following the annual meeting of the stockholders. Any vacancy
occurring on a committee shall be filled by the Board of Directors by a
majority vote of the whole Board when, in the judgment of the Board of
Directors, the best interest of the corporation will be thereby served.

SECTION 3.9 Salary and Expenses. Directors shall be entitled to receive
-------------------
reasonable fees for their services as directors and committee members and shall
be allowed their reasonable traveling expenses when actually engaged in the
business of the corporation. Nothing herein contained shall be construed as
precluding any Director from serving the corporation in any other capacity and
receiving compensation therefor.

ARTICLE IV

NOTICES

SECTION 4.1 Manner of Notice to Directors. Whenever under the provisions
-----------------------------
of law, the Certificate of Incorporation, or these By-Laws, notice is required
to be given to any Director, such notice may be given in writing by personal
delivery to the business address of such Director; and such notice shall be
deemed to be given when it is thus delivered. Notice may also be given in
writing by mail addressed to such Director at his business address, and such
notice shall be deemed to be given at the time when it is deposited in the
United States mail in a sealed envelope, with first-class postage affixed
thereto. Notice to Directors may also be given by telephone or telegram. It
shall be the duty of every Director to furnish the Secretary with his business
address and to notify the Secretary of any change therein.

SECTION 4.2 Notice to Stockholders. Whenever under the provisions of law,
----------------------
the Articles of Incorporation, or these By-Laws, notice is required to be given
to any stockholder, that requirement of notice shall not be construed to require
personal delivery, and such notice may be given, in writing, by mail addressed
to such stockholder at the address of such stockholder as it appears in the
stock transfer books of the corporation. Such notice shall be deemed to be
given at the time when it is deposited in the United States mail in a sealed
envelope, with first-class postage affixed thereto.

SECTION 4.3 Waiver of Notice. Whenever any notice is required to be given
----------------
under the provisions of law, the Certificate of Incorporation, or these By-Laws,
a waiver thereof in writing signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.

ARTICLE V

OFFICERS

SECTION 5.1 Designations. The officers of the corporation shall be a
------------
Chairman of the Board, a President, such number of Vice Presidents (including
any Executive Vice Presidents and any Senior Vice Presidents) as the Board of
Directors may determine from time to time, a Controller, a Treasurer, and a
Secretary. Two or more offices may be held by the same person, except as
otherwise provided by law.

-4-
<PAGE>

The Board of Directors may elect or appoint such other officers (including
a Vice Chairman of the Board, one or more Assistant Vice Presidents, one or more
Assistant Controllers, one or more Assistant Treasurers and one or more
Assistant Secretaries) as it deems necessary, who shall have such authority and
shall perform such duties as the Board of Directors may prescribe.

If additional officers are elected or appointed during the year, each of
them shall hold office until the next annual meeting of the Board of Directors
at which officers are regularly elected or appointed and until his successor is
elected or appointed or until his earlier death or resignation or removal in the
manner hereinafter provided.

SECTION 5.2 Election and Term of Office. The officers of the corporation
---------------------------
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the stockholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided.

SECTION 5.3 Resignation and Removal. Any officer may resign at any time
-----------------------
by giving written notice to the Chairman of the Board, the President or the
Secretary of the corporation, and such resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified therein, then it shall take effect when accepted by action of the
Board. Except as aforesaid, the acceptance of such resignation shall not be
necessary to make it effective.

Any officer may be removed by the Board of Directors whenever, in its
judgment, the best interests of the corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer shall not of itself create
contract rights.

SECTION 5.4 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.

SECTION 5.5 Chairman of the Board. The Chairman of the Board shall
---------------------
preside at all meetings of the Board of Directors and of the stockholders at
which he is present.

SECTION 5.6 Vice Chairman of Board (if any). The Vice Chairman of the
--------------------------------
Board shall preside at all meetings of the Board of Directors and of the
stockholders in the absence of the Chairman of the Board and have such powers
and duties as shall be prescribed by the Board of Directors and the Chairman of
the Board.

SECTION 5.7 President. The President shall have general charge of the
---------
business and affairs of the corporation and shall preside at meetings of the
Board of Directors and of the stockholders in the absence of the Chairman of the
Board or the Vice Chairman of the Board (if any).

SECTION 5.8 Vice Presidents. Any Vice President shall have such powers
---------------
and duties as shall be prescribed by the President, the Chairman of the Board or
the Board of Directors.

SECTION 5.9 Treasurer. The Treasurer shall have charge and custody of and
---------
be responsible for all funds and securities of the corporation.

SECTION 5.10 Controller. The Controller shall be in charge of the
----------
accounts of the corporation and shall perform such duties as from time to time
may be assigned to him by the President, the Chairman of the Board or the Board
of Directors.

SECTION 5.11 Secretary. The Secretary shall keep the records of all
---------
meetings of the stockholders and of the Board of Directors and the Executive
Committee (if any). He, or any Assistant Secretary, shall affix the seal of the
corporation to all deeds, contracts, bonds or other instruments requiring the
corporate seal, and when the same

-5-
<PAGE>

shall have been signed on behalf of the corporation by a duly authorized
officer, shall be attested by his or an Assistant Secretary's signature.

ARTICLE VI

INDEMNIFICATION

SECTION 6.1 Third Party Actions. The corporation shall indemnify any
-------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

SECTION 6.2 Actions by or in the Right of the Corporation. The corporation
---------------------------------------------
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

SECTION 6.3 Determination of Conduct. The determination that an officer,
------------------------
director, employee or agent, has met the applicable standard of conduct set
forth in Sections 6.1 and 6.2 of this Article VI (unless indemnification is
ordered by a court) shall be made (i) by the Board of Directors by a majority
vote of a quorum consisting of Directors who are not parties to such action,
suit or proceeding, or (ii) if such quorum is not obtainable, or even if
obtainable a quorum of disinterested Directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders.

SECTION 6.4 Payment of Expenses in Advance. Expenses incurred in
------------------------------
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article VI.

SECTION 6.5 Definition. As used in this Article VI, the term "corporation"
----------
includes all constituent corporations absorbed by ANR Pipeline Company or a
subsidiary thereof in a consolidation, merger or other acquisition transaction,
as well as the resulting or surviving corporation, so that any person who is or
was a director, officer, employee or agent of such a constituent corporation, or
is or was serving at the request of such a constituent

-6-
<PAGE>

corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article VI with respect to ANR Pipeline
Company as he would if he had served the resulting or surviving corporation in
the same capacity.

SECTION 6.6 Indemnity Not Exclusive. The indemnification and advancement
-----------------------
of expenses provided hereunder shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any other by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. It is the intent of this Article VI that the corporation
shall indemnify those persons eligible hereunder to the fullest extent permitted
under The General Corporation Laws of Delaware.

ARTICLE VII

CERTIFICATES FOR STOCK AND
THEIR TRANSFER

SECTION 7.1 Certificates of Stock. Every stockholder shall be entitled to
---------------------
a certificate, in such form as the Board of Directors shall from time to time
approve, signed by the Chairman or President or a Vice President and by the
Secretary or an Assistant Secretary. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is used, it may be issued by the corporation with the same effect as
if he were such officer, transfer agent or registrar at the date of such issue.

SECTION 7.2 Replacement of Lost or Destroyed Certificates. The Board of
---------------------------------------------
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the corporation alleged to
have been lost or destroyed, upon the making of an affidavit by the person
claiming the certificate to be lost, stolen, or destroyed as to his ownership of
the certificate and of the facts as to its loss, theft, or destruction.

SECTION 7.3 Transfer of Stock. Upon surrender to the corporation or the
-----------------
Tbansfer Agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.

SECTION 7.4 Fixing Record Date. In order that the corporation may
------------------
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.

SECTION 7.5 Record Ownership of Stock. The corporation shall be entitled
-------------------------
to treat the person in whose name any share of stock is registered as the owner
thereof, for all purposes, and shall not be bound to recognize any equitable or
other claim to, or interest in, such share on the part of any other person,
whether or not it shall have notice thereof, except as otherwise expressly
provided by the laws of Delaware.

ARTICLE VIII

-7-
<PAGE>

GENERAL PROVISIONS

SECTION 8.1 Dividends. Subject to the statutes of the State of Delaware,
---------
the Board of Directors may declare and pay dividends or make other distributions
in cash, its securities, or its property.

SECTION 8.2 Books and Records. The corporation shall keep current and
-----------------
complete books and records of account and shall keep minutes of the proceedings
of the stockholders and Board of Directors, and shall keep at its registered
office or principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, the names and addresses of all
stockholders and the number and class of the shares held by each.

SECTION 8.3 Checks and Notes. All checks or demands for money and notes
----------------
of the corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.

SECTION 8.4 Fiscal Year. The fiscal year of the corporation shall be the
-----------
calendar year.

SECTION 8.5 Seal. The corporation shall have a corporate seal in a form
----
which shall be approved by the Board of Directors.

SECTION 8.6 Voting of Stock. Unless otherwise ordered by the Board of
---------------
Directors, the Chairman, the President, the Executive Vice Presidents, or any
Vice President of the corporation shall have full power and authority to act and
vote, in the name and on behalf of this corporation, at any meeting of
stockholders of any corporation in which the corporation may hold stock, and at
any such meeting shall possess and may exercise any and all of the rights and
powers incident to the ownership of such stock, and shall have full power and
authority to execute, in the name of and on behalf of this corporation, proxies
authorizing any suitable person or persons to act and to vote at any meeting of
stockholders of any corporation in which this corporation may hold stock, and at
any meeting the person or persons so designated shall possess and may exercise
any and all of the rights and powers incident to the ownership of such stock.

SECTION 8.7 Amendment of By-Laws. These By-Laws may be altered, amended
--------------------
or repealed at any meeting of the Board of Directors at which a quorum is
present by a majority vote of the Directors. Nothing in this Article shall be
construed to limit the power of the stockholders to amend, alter or rescind any
of the By-Laws of the corporation.

-8-

<PAGE>

Exhibit 21

SUBSIDIARIES OF ANR PIPELINE COMPANY

State of
Incorporation
-------------

ANR Atlantic Pipeline Company........................... Delaware
ANR Energy Conversion Company............................ Michigan
ANR Iroquois, Inc........................................ Delaware
ANR Mayflower Company.................................... Delaware
ANR Southern Pipeline Company............................ Delaware
American Natural Offshore Company........................ Delaware
Subsidiaries:
Texas Offshore Pipeline System, Inc.................... Delaware
Unitex Offshore Transmission Company................... Delaware

<PAGE>

Exhibit 23

CONSENT OF DELOITTE & TOUCHE LLP

We consent to the incorporation by reference in Registration Statement No.
33-50375 of ANR Pipeline Company on Form S-3 of our report dated February 2,
1995, appearing in this Annual Report on Form 10-K of ANR Pipeline Company for
the year ended December 31, 1994.

DELOITTE & TOUCHE LLP

Detroit, Michigan
March 27, 1995

<PAGE>

<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ANR PIPELINE
COMPANY FORM 10-K ANNUAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 324
<ALLOWANCES> 0
<INVENTORY> 41
<CURRENT-ASSETS> 388
<PP&E> 3,421
<DEPRECIATION> 2,226
<TOTAL-ASSETS> 1,859
<CURRENT-LIABILITIES> 330
<BONDS> 437
<COMMON> 0
0
0
<OTHER-SE> 788
<TOTAL-LIABILITY-AND-EQUITY> 1,859
<SALES> 106
<TOTAL-REVENUES> 842
<CGS> 124
<TOTAL-COSTS> 554
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> 234
<INCOME-TAX> 82
<INCOME-CONTINUING> 152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>