QUESTAR PIPELINE CO, 10-K, 2000-03-30

QUESTAR PIPELINE CO
10-K, 2000-03-30
NATURAL GAS DISTRIBUTION

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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 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_____ TO _____

Commission File No. 0-14147

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

State of Utah 87-0307414
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

180 East 100 South, P.O. Box 45360, Salt Lake City, Utah 84145-0360
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (801) 324-5555

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933:
9 7/8% Debentures due 2020
9 3/8% Debentures due 2021
Medium Term Notes, Series A, 5.85% to 7.55% due 2008 to 2019

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [x]
[ ] No

State the aggregate market value of the voting stock held by
nonaffiliates of the registrant as of March 1, 2000. $0.

Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of March 1, 2000. 6,550,843
shares of Common Stock, $1.00 par value. (All shares are owned by
Questar Regulated Services Company.)

Registrant meets the conditions set forth in General Instruction
(I)(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K
Report with the reduced disclosure format.

TABLE OF CONTENTS

Heading Page

PART I

Items 1.
and 2. BUSINESS AND PROPERTIES
General
Transmission System
Transportation Service
Storage/Processing
New Projects
Regulatory Environment
Competition
Employees
Relationships with Affiliates

Item 3. LEGAL PROCEEDINGS

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

PART II

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

Item 6. (Omitted)

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA

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

PART III

Items
10-13. (Omitted)

PART IV

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

SIGNATURES

FORM 10-K
ANNUAL REPORT, 1999

PART I

ITEMS 1 AND 2. BUSINESS AND PROPERTIES

General

Questar Pipeline Company ("Questar Pipeline" or the "Company") is
an interstate pipeline company that transports natural gas in the Rocky
Mountain states of Utah, Wyoming, and Colorado, and provides storage
services in Utah and Wyoming. The Company is an affiliate of Questar
Corporation ("Questar"), a diversified natural gas holding company. As
a "natural gas company," the Company is subject to regulation by the
Federal Energy Regulatory Commission (the "FERC") pursuant to the
Natural Gas Act of 1938, as amended.

Questar Pipeline, as an open-access pipeline, transports gas for
affiliated and unaffiliated customers. It also owns and operates the
Clay Basin storage facility, which is a large underground storage
project in northeastern Utah, and other underground storage operations
in Utah and Wyoming. The Company is involved in two partnerships,
Overthrust Pipeline Company ("Overthrust"), and TransColorado Gas
Transmission Company ("TransColorado").

Questar Pipeline is a wholly-owned subsidiary of Questar Regulated
Services Company ("Regulated Services"), which is a subholding company
under Questar. Other entities within the Regulated Services group
include Questar Gas Company ("Questar Gas"), a local distribution
company, and Questar Energy Services, Inc. ("QES"), an entity created to
market additional services to utility customers. All Regulated Services
companies are managed by a common group of officers, which increases
administrative efficiency.

The Company has significant business relationships with its
affiliates, particularly Questar Gas. To serve the needs of its 686,300
customers in Utah, southwestern Wyoming, and southeastern Idaho, Questar
Gas has reserved approximately 800,000 decatherms ("Dth") per day of
firm transportation capacity on Questar Pipeline's transmission system.
(A Dth is the amount of heat energy equal to 10 therms or one million
British thermal units ("Btu")). Questar Gas has also contracted for
firm storage capacity available at Clay Basin and has storage contracts
at the smaller peaking storage reservoirs operated by Questar Pipeline.
Through a subsidiary, Questar Pipeline has a processing plant that
extracts carbon dioxide from gas volumes delivered to Questar Gas.

Questar Pipeline transports natural gas owned by Questar Gas and
produced from properties operated by Wexpro Company ("Wexpro"), another
affiliate, as well as natural gas volumes purchased directly by Questar
Gas from field producers and other suppliers. The Company also
transports volumes that are marketed by Questar Energy Trading Company
("Questar Energy Trading"), another affiliated entity. The following
diagram sets forth the corporate structure of the
Company and certain affiliates:

Questar Corporation

Questar Market Resources, Inc.

Wexpro Company
Questar Exploration and Production Company
Questar Energy Trading Company
Questar Gas Management Company

Questar Regulated Services Company

Questar Gas Company
Questar Pipeline Company
Questar Line 90 Company
Questar Transportation Services Company
Questar Southern Trails Pipeline Company
Questar TransColorado, Inc.
Questar Energy Services,Inc.

Questar InfoComm, Inc.

The major activities of Questar Pipeline are described in more
detail below:

Transmission System

The Company's core transmission system is strategically located in
the Rocky Mountains near large reserves of natural gas. It is referred
to as a "hub and spoke" system, rather than a "long-line" pipeline,
because of its physical configuration, multiple interconnections to
other interstate pipeline systems, and access to major producing areas.
Questar Pipeline's transmission system has connections with the pipeline
systems of Colorado Interstate Gas Company ("CIG"); the middle segment
of the Trailblazer Pipeline System ("Trailblazer") owned by Wyoming
Interstate Company, Ltd. ("WIC"); The Williams Companies Inc.
("Williams"), including Kern River Gas Transmission Company ("Kern
River"); TransColorado; and Overthrust. These connections have opened
markets outside Questar Gas's service area and allow the Company to
transport gas for others.

The Company's transmission system includes 1,734 miles of
transmission lines that interconnect with other pipelines and that link
various producers of natural gas with Questar Gas's distribution
facilities in Utah and Wyoming. (This total transmission mileage
includes pipelines associated with the Company's storage fields and tap
lines used to serve Questar Gas.) The system includes two major
segments, often referred to as the northern and southern systems, which
are linked together. The northern segment extends from northwestern
Colorado through southwestern Wyoming into northern Utah; the southern
segment of the transmission system extends from western Colorado to
Payson, in central Utah.

The Company's pipelines, compressor stations, regulator stations,
and other transmission-related facilities are constructed on properties
held under long-term easements, rights of way, or fee interests
sufficient for the conduct of its business activities.

In addition to the transmission system described above, Questar
Pipeline has a 72 percent interest in and is the operating partner of
Overthrust, a general partnership that was organized in 1979 to
construct, own, and operate the Overthrust segment of Trailblazer. (Its
percentage increased from 54 percent to 72 percent effective January 1,
2000, when it purchased the 18 percent owned by Enron Overthrust
Pipeline Company.) Trailblazer is a major 800-mile pipeline that
transports gas from producing areas in the Rocky Mountains to the
Midwest. The 88-mile Overthrust segment is the western-most of
Trailblazer's three segments. Although the Overthrust segment is
currently underutilized, the Company and its remaining partners are
reviewing opportunities, including backhauling, to increase its value.
The Overthrust partnership agreement requires unanimous consent of all
partners on major operating and financial issues.

At year-end 1999, the Company recorded a writedown of $49.7
million ($31.3 million on an after-tax basis) of its interest in the
TransColorado pipeline project. Questar TransColorado, Inc., which is a
subsidiary of Questar Pipeline, and a subsidiary of Kinder Morgan, Inc.
(formerly KN Energy) each have a 50 percent interest in the project.
This pipeline, which commenced operations March 31, 1999, was built to
transport gas from the Rocky Mountain area that was traditionally priced
lower than other gas supplies, e.g., San Juan, to California and
Midwestern markets through interconnections with major pipeline systems.
Constructed at an approximate cost of $310 million, the pipeline
originates at a point on Questar Pipeline's system 25 miles east of
Rangely in northwestern Colorado and extends 292 miles to the Blanco hub
in northwestern New Mexico.

In its first nine months of operation, TransColorado incurred
significant losses because basis differentials, which reflect gas prices
in different producing basins, were not sufficient to encourage
producers and market aggregators to transport volumes on the line. The
Company determined that the situation was not temporary in nature.
Questar Pipeline has a contractual right to put its 50 percent interest
in TransColorado to its partner during a one-year period commencing
March 31, 2001.

Questar Pipeline owns and operates a major compressor complex near
Rock Springs, Wyoming, that compresses volumes of gas from the Company's
transmission system for delivery to the WIC segment of the Trailblazer
system and to CIG. The complex has become a major delivery point on
Questar Pipeline's system. Five of the Company's major natural gas
lines are connected to the system at the complex. In addition, both of
CIG's Wyoming pipelines and the WIC segment are connected to the
complex.

Transportation Service

Questar Pipeline's largest single transportation customer is its
affiliate, Questar Gas. During 1999, the Company transported 105.5
million decatherms ("MMDth") for Questar Gas, compared to 107.5 MMDth in
1998. These transportation volumes include Questar Gas's
cost-of-service gas produced by Wexpro and volumes purchased by Questar
Gas directly from field producers and other suppliers.

Questar Gas has reserved capacity of about 800,000 Dth per day, or
72 percent of Questar Pipeline's reserved daily capacity. The Company's
transportation agreement with Questar Gas was extended in 1999 for three
years and expires June 30, 2002. Questar Gas paid an annual reservation
charge of approximately $50.7 million to the Company in 1999, which
includes reservation charges attributable to firm and "no-notice"
transportation. Questar Gas only needs its total reserved capacity
during design-day or peak-demand situations. When it is not fully
utilizing its capacity, Questar Gas releases the capacity to others,
primarily industrial transportation customers and marketing entities.

The Company recovers approximately 95 percent of its transmission
cost of service through reservation charges from firm transportation
customers. In other words, these customers pay primarily for access to
transportation capacity. Consequently, the Company's throughput volumes
do not have a significant effect on its short-term operating results.
Questar Pipeline's transportation revenues are not significantly
affected by fluctuating demand based on the vagaries of weather or gas
prices. The Company's revenues may be adversely affected if the FERC
changes its basic regulatory scheme of "straight fixed-variable" rates.

The Company's total system throughput decreased from 255.1 MMDth
in 1998 to 253.5 MMDth in 1999. This decrease was primarily
attributable to lower transportation volumes for affiliated customers
other than Questar Gas, which declined from 26.9 MMDth in 1998 to 12.2
MMDth in 1999. Questar Pipeline's overall decrease in volumes resulted
in a one percent decrease in revenues associated with transportation
service, or $69.9 million 1999 compared to $70.8 million in 1998.

Questar Pipeline's transmission system is an open-access system
and has been since September of 1988. The Company's tariff provisions
require it to transport gas on a nondiscriminatory basis when it has
available transportation capacity. The Company does have limited
opportunities for interruptible transportation services.

Storage/Processing

Questar Pipeline's Clay Basin storage facility in northeastern
Utah is the largest underground storage reservoir in the Rocky
Mountains. The facility has a total capacity of 117.5 Bcf. Clay Basin
has been operational since 1977 and has been successfully expanded
several times.

Clay Basin's firm storage capacity is fully subscribed by
customers under long-term agreements. Questar Gas currently has 13.3
Bcf of working gas capacity at Clay Basin. Other large customers
include Williams; Washington Natural Gas Company, a distribution utility
in the state of Washington; and BC Gas Utility Ltd., a distribution
utility in British Columbia, Canada. Storage service is important to
distribution companies that need to match annual gas purchases with
fluctuating customer demand, improve service reliability, and avoid
imbalance penalties. Questar Pipeline offers interruptible storage
service at Clay Basin and also allows firm storage service customers the
right to release their injection and withdrawal rights to other parties.

The Company also owns and operates three smaller storage
reservoirs. These projects were developed specifically to serve Questar
Gas's needs, and Questar Gas reserves 100 percent of their working gas
capacity. These small reservoirs are used primarily to supplement
Questar Gas's gas supply needs on peak-demand days.

The Company's storage facilities are certificated by the FERC, and
its rates for storage service (based on operating costs and investment
in plant plus an allowed rate of return) are subject to approval by the
FERC.

Through its subsidiary--Questar Transportation Services
Company--Questar Pipeline also owns a processing plant near Price, Utah,
that removes carbon dioxide from coalbed methane gas in order to raise
the Btu content enough to be safely and efficiently used in appliances
in Questar Gas's service area.

New Projects

During 1999, the Company received a favorable decision from the
FERC for its proposed conversion of an oil pipeline to natural gas.
(The line is currently owned by one subsidiary, Questar Line 90 Company,
but will eventually be owned and operated by another subsidiary, Questar
Southern Trails Company.) The 700-mile pipeline, which Questar Pipeline
named the Southern Trails line after acquiring it in 1998, extends from
the Four Corners area of Utah, Colorado, New Mexico, and Arizona to Long
Beach, California. The FERC made a preliminary decision that a
certificate of public convenience and necessity should be issued to
Southern Trails under the optional certificate procedure and dismissed
as "speculative" allegations made by intervening parties that the line
would result in idle capacity and unrecovered costs on other systems.
Final regulatory approval is dependent on the completion of a favorable
environmental review.

Questar Pipeline has delayed its original plan to complete the
conversion and install the necessary compressors during 2000. The
Company, in conjunction with potential customers and other interested
parties, has urged the California Public Utilities Commission to modify
tariff provisions that protect a local distribution company in
California from competition by Southern Trails. Questar Pipeline is
optimistic that California regulators will take action to allow more
competition, which will facilitate its efforts to market capacity to
California customers. The Company will not convert the line to natural
gas service until it receives the FERC certificate, regulatory issues
restricting its ability to compete for transportation customers in
California are resolved, and rights-of-way are obtained.

Questar Pipeline has a pending application before the FERC to
construct and operate a new line, identified as Main Line 104, that is
75.6 miles long and 24 inches in diameter and extends from Price, Utah,
near the Ferron area of coalbed methane gas, to the Company's system at
Payson, Utah, and the Kern River line near Elberta, Utah. CIG is a 50
percent partner in the project, which is currently estimated to cost $81
million and will provide approximately 272,000 Dth per day of additional
transportation capacity. Questar Gas has contracted with the Company
for approximately 22 percent of the additional capacity on the line,
which is scheduled to be in service before the winter heating season of
2001-02.

Regulatory Environment

The Company is a natural gas company under the Natural Gas Act and
is subject to the jurisdiction of the FERC as to rates and charges for
storage and transportation of gas in interstate commerce, construction
of new storage and transmission facilities, extensions or abandonments
of service and facilities, accounts and records, and depreciation and
amortization policies. Questar Pipeline holds certificates of public
convenience and necessity granted by the FERC for the transportation and
underground storage of natural gas in interstate commerce and for the
facilities required to perform such operations.

Questar Pipeline does not currently plan to file a general rate
case in 2000. It however, will continue to review its revenues and
costs as it adds new facilities that are not included in its rate base
and makes expenditures to comply with regulatory mandates. The Company
has a proceeding before the FERC involving an increase in its fuel gas
reimbursement percentage ("FGRP"), which is a tariff provision for
recovery of gas used in operating the system and "lost and unaccounted
for" gas. The FGRP increase was implemented effective January 1, 2000,
subject to refund.

Under the Natural Gas Pipeline Safety Act of 1968, as amended, the
Company is subject to the jurisdiction of the Department of
Transportation ("DOT") with respect to safety requirements in the
design, construction, operation and maintenance of its transmission and
storage facilities. The Company also complies with the DOT's drug and
alcohol testing regulations.

In addition to the regulations discussed above, Questar Pipeline's
activities in connection with the operation and construction of
pipelines and other facilities for transporting or storing natural gas
are subject to extensive environmental regulation by state and federal
authorities, including state air quality control boards, the Bureau of
Land Management, the Forest Service, the Corps of Engineers, and the
Environmental Protection Agency. These compliance activities increase
the cost of planning, designing, installing and operating facilities.

Competition

Questar Pipeline extended its footprint to other parts of the
western United States by participating in the TransColorado pipeline
project and purchasing the Southern Trails line. There are market risks
associated with these projects, as evidenced by Questar Pipeline's
decision to write down its investment in TransColorado. Questar
Pipeline's efforts to make the Southern Trails line successful are
affected by its ability to address regulatory constraints and to compete
with a local distribution company in southern California.

Competition for Questar Pipeline's transportation and storage
services has intensified in recent years. Regulatory changes have
significantly increased customer flexibility. The Company actively
competes with other interstate pipelines for transportation volumes
throughout the Rocky Mountain region.

The Company has two key assets that contribute to its continued
success. It has a strategically located and integrated transmission
system with interconnections to major pipeline systems and with access
to major producing areas and markets. Questar Pipeline also has the
Clay Basin storage facility, a storage reservoir that has been
successfully operated since 1977, has been expanded in response to
interest from customers, and is fully subscribed by firm-service
customers under contracts that are generally long-term in nature.
Questar Pipeline intends to take advantage of these assets by increasing
its "intra hub" capacity or its ability to quickly and reliably move gas
volumes between receipt and delivery points and by continuing to review
opportunities to increase its storage capacity and services. The
Company is currently reviewing the feasibility of a salt cavern storage
project in southwestern Wyoming.

Employees

As of December 31, 1999, the Company and its subsidiaries had 129
employees, compared to the 122 employees it had as of year-end 1998.
None of these employees is represented under collective bargaining
agreements. The Company participates in the comprehensive benefit plans
of Questar and pays the share of costs attributable to its employees
covered by such plans. Questar Pipeline's employee relations are
generally deemed to be satisfactory.

Relationships with Affiliates

There are significant business relationships between the Company
and its affiliates, particularly Questar Gas. Some of these
relationships are described above. See Note 8 to the financial
statements for additional information concerning transactions between
the Company and its affiliates.

The Company obtains data processing and communication services
from an affiliate, Questar InfoComm Inc.. Regulated Services, the
Company's parent, has employees who perform administrative, engineering,
accounting, marketing, budget, tax, regulatory affairs, and legal
services for all entities within it, including Questar Pipeline.
Questar also provides certain administrative services--governmental
affairs, financial, and audit--to the Company and other members of the
consolidated group. A proportionate share of the costs associated with
such services is directly billed or allocated to Questar Pipeline.

ITEM 3. LEGAL PROCEEDINGS

Questar Pipeline is involved in various legal and regulatory
proceedings. While it is not currently possible to predict or determine
the outcome of these proceedings, it is the opinion of management that
the outcome will not have a material adverse effect on the Company's
financial position or liquidity.

Questar Pipeline and some affiliates are involved in several cases
filed by an independent producer, Jack Grynberg. In the first case, the
Company is the named party, even though Questar Gas, as a result of
acquiring Questar Pipeline's gas purchase contracts, is liable for the
judgment. This case resulted in an adverse jury verdict in 1994, but
the presiding federal district court judge in Wyoming entered a judgment
as a matter of law that vacated most portions of the original jury
verdict. The Tenth Circuit Court of Appeals, in January of 2000,
reinstated some portions of the original jury verdict.

Grynberg filed a second case before the same federal district
court in 1997, alleging new claims against Questar Pipeline and
affiliated defendants. He alleged antitrust and fraud claims in
addition to the same claims raised in the initial litigation for a later
period of time. This case has been stayed pending the outcome of the
Tenth Circuit appeal, although the district court ruled favorably on the
Questar parties' motion for a partial summary judgment.

Questar affiliates, including Questar Pipeline, are also named
defendants in a lawsuit filed by Grynberg under the Federal False Claims
Act. This case and the 75 substantially similar cases filed by Grynberg
against pipelines and their affiliates have been consolidated for
discovery and pre-trial rulings in Wyoming's federal district court.
The cases involve allegations of industry-wide mismanagement of the
value of gas on which royalty payments are due the federal government.
The complaint also seeks treble damages and imposition of civil
penalties.

Finally, Grynberg has filed a case against Questar Pipeline in
Utah state district court, alleging mismeasurement of gas volumes
attributable to his working ownership interest in a specified property.
Grynberg cites mismanagement to support claims for breach of contract,
negligent misrepresentation, fraud, breach of fiduciary
responsibilities, etc.

It is too early to estimate the outcome of the various cases, with
the exception of the first case that has been resolved by the Tenth
Circuit, filed by Grynberg against Questar Pipeline and its affiliates.

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

The Company, as the wholly owned subsidiary of a reporting person,
is entitled to omit the information requested in this Item.

PART II

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

The Company's outstanding shares of common stock, $1.00 par value,
are currently owned by Regulated Services. Information concerning the
dividends paid on such stock and the Company's ability to pay dividends
is reported in the Statements of Shareholder's Equity and Notes to
Financial Statements included in Item 8.

ITEM 6. SELECTED FINANCIAL DATA

The Company, as the wholly owned subsidiary of a reporting person,
is entitled to omit the information requested in this Item.

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

RESULTS OF OPERATIONS

Natural Gas Transmission - Questar Pipeline
conducts natural gas transmission and storage
operations. Following is a summary of financial
results and operating information:
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
(Dollars In Thousands)
<S> <C> <C> <C>
OPERATING INCOME
Revenues
Transportation $69,885 $70,824 $68,837
Storage 37,647 36,463 34,410
Processing 3,570
Other 1,058 1,270 2,190
Total revenues 112,160 108,557 105,437

Operating expenses
Operating and maintenance 38,534 38,832 37,334
Depreciation and amortization 16,743 13,927 14,797
Other taxes 2,488 2,600 2,816
Total expenses 57,765 55,359 54,947
Operating income $54,395 $53,198 $50,490

OPERATING STATISTICS
Natural gas transportation volumes (in MDth)
For unaffiliated customers 135,886 120,747 116,215
For Questar Gas 105,499 107,501 110,311
For other affiliated customers 12,153 26,878 37,797
Total transportation 253,538 255,126 264,323
Transportation revenue (per Dth) $0.28 $0.28 $0.26
Clay Basin storage, working gas-
capacity (in Bcf) 51.3 51.3 46.3
</TABLE>

Questar Pipeline's operating income increased 2% in 1999 due
primarily to the addition of gas- processing operations. A
subsidiary of Questar Pipeline removes carbon dioxide from certain
gas supplies to make them suitable for Questar Gas' system. A $20
million plant was completed and initiated operations mid-year 1999.

Revenues from storage operations increased 3% in 1999 as a result
of expanding firm-storage capacity at the company's Clay Basin
facility. Storage capacity was enlarged in May 1998 and is 100%
subscribed under long-term contracts. A majority of the capacity
is subscribed under long-term contracts. Questar Gas has
contracted for 26% of firm-storage capacity for at least eight
years.

Transportation revenues decreased 1% in 1999 due to the decrease in
gas volumes transported for affiliated companies. As of December
31, 1999, approximately 76% of Questar Pipeline's transportation
system was reserved by firm-transportation customers under
contracts with varying terms and lengths. Questar Gas has reserved
transportation capacity from Questar Pipeline of approximately
800,000 dth per day, representing 76% of the total reserved
daily-transportation capacity at December 31, 1999. This contract,
which accounts for 83% of the demand charges collected by Questar
Pipeline, was amended in 1999 extending the term to June 2002.

Questar Pipeline's operating and maintenance expenses decreased 1%
in 1999 compared with 1998 due primarily to labor-cost savings from
a reduction in the number of employees in the third quarter of
1998. Depreciation expense increased 20% in 1999 resulting from
capital investment in facilities and information-technology
systems.

Questar Pipeline recorded a $49.7 million pre-tax write-down of its
investment in a partnership in 1999. A subsidiary of Questar
Pipeline is a 50% partner, along with a Kinder Morgan Inc.
subsidiary, in the TransColorado Pipeline. With continuing low
volumes due to unfavorable regional transportation economics, the
Company experienced an other-than-temporary decline in its
partnership investment and recorded a write-down. The write-down
resulted in a $31.3 million after-tax reduction in net income.

The TransColorado Pipeline extends 292 miles from northwestern
Colorado to a northern New Mexico pipeline hub and cost
approximately $310 million. Questar Pipeline has a contractual
option to put its 50% ownership of the pipeline interest to its
partner, beginning April 1, 2001. The option has a one-year life.
Questar's share of TransColorado's operating losses in 1999
averaged $900,000 before income taxes per month for its nine months
of operations. The Company had reported TransColorado's operating
results in losses from unconsolidated affiliates.

Questar Pipeline's share of the loss reported by TransColorado
Pipeline amounted to $5.9 million, which comprised an operating
loss of $8.2 million reduced by capitalized financing charges
(AFUDC) of $2.3 million. Earnings from unconsolidated affiliates
were lower in 1998 when compared with 1997 due to lower amounts of
AFUDC.

Debt expense was higher in 1999 compared with 1998 because of
additional long-term borrowings. Questar Pipeline borrowed $42
million in October 1999 through a medium-term note program. The
notes have a 10-year life and a weighted- average coupon rate of
7.48%. In 1998, the Company borrowed $88.4 million under its
medium-term note program with a weighted average coupon rate of
6.14% and a weighted average maturity of 12.6 years.

A subsidiary of Questar Pipeline, Questar Line 90 Company,
purchased an oil pipeline for $38 million in 1998. The line extends
from the Paradox producing basin of northwestern New Mexico to Long
Beach, California. The Company intends to convert this line, named
Questar Southern Trails Pipeline, to transport natural gas to
customers along its route and in the Los Angeles basin.
Environmental and regulatory review processes are continuing. The
FERC has given preliminary approval for conversion of the pipeline.
A certificate could be granted late in 2000. Because of the time
necessary to obtain regulatory approval, meet construction
schedules and gauge current market conditions, Questar Pipeline
does not expect to have the line in service before mid-2001.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Net cash provided from operating activities of $11,006,000 in 1999
declined $49,291,000 from the amount reported in 1998 due primarily
to a reduction in accounts payable. Accounts payable balances were
unusually high at the end of 1998 because of construction projects
that have since been completed.

Investing Activities

Following is a summary of capital expenditures for 1999, 1998 and a
forecast of 2000 expenditures:
<TABLE>
<CAPTION>
2000
Forecast 1999 1998
(In Thousands)
<S> <C> <C> <C>
Transmission system $17,932 $11,936 $21,395
Storage 3,492 1,571 6,284
Partnerships 24,046 14,414 26,000
Southern Trails Pipeline 10,000 14,639 39,471
Processing plant - carbon dioxide removal 1,000 2,912 16,259
General 6,901 4,952 4,909
$63,371 $50,424 $114,318
</TABLE>

Capital spending included equity investment in a partnership to
complete construction of the TransColorado Pipeline, costs of a
crude-oil pipeline which will be converted to transport gas in the
future, expansion of the traditional gas-transmission network and
completion of a gas-processing plant.

Financing Activities

Questar Pipeline funded 1999 capital expenditures primarily with
the proceeds from issuing debt under its medium-term note program
and net cash provided from operating activities. Questar Pipeline
borrowed $42 million in October 1999 and $88.4 million in 1998
under its medium-term note program. The Company retired $20 million
of its 9 7/8% debt in May of 1998 for a cash payment of
$23,386,000, which included a premium payment and interest due.
Forecasted 2000 capital expenditures are expected to be financed
from net cash flow provided from operations and additional
borrowings under the medium-term note program and from Questar.

Questar makes loans to Questar Pipeline under a short-term
borrowing arrangement. Outstanding short-term notes payable to
Questar totaled $42.5 million with an interest rate of 6.61% at
December 31, 1999 and $38 million with an interest rate of 5.71% at
December 31, 1998.

Questar Pipeline's capital structure at year-end 1999 was 59%
long-term debt and 41% common shareholder's equity. Moody's and
Standard and Poor's have rated the Company's long-term debt A1 and
A+, respectively.

Year 2000

Questar Corporation established a team to address the issue of
computer programs and embedded computer chips being unable to
distinguish between the year 1900 and the year 2000 (Y2K). The
team identified 55 projects among Questar and its affiliated
companies that were assessed, remediated, tested and determined to
be completed. In the process, Questar employees contacted more than
8,000 vendors and suppliers to assess their readiness to meet
obligations to Questar. The cost of the Y2K project was
approximately $5.1 million and Questar Pipeline's portion was $1.0
million.

Questar did not experience a disruption of operations because of
Y2K. Preparation for Y2K provided several benefits. Questar
completed an inventory of its primary systems and a testing
laboratory. Systems were tested and remediated where necessary.
The testing laboratory will become an important part of
information-technology management. In response to the Y2K
challenge, business contingency plans were revised and successfully
tested.

Forward-Looking Statements

The Form 10-K contains forward-looking statements about future
operations, capital spending, regulatory matters and expectations
of Questar Pipeline. According to management, these statements are
made in good faith and are reasonable representations of the
Company's expected performance at the time. Actual results may vary
from management's stated expectations and projections due to a
variety of factors.

Important assumptions and other significant factors that could
cause actual results to differ materially from those discussed in
forward-looking statements include changes in general economic
conditions, gas prices and availability of gas supplies,
competition, regulatory issues, weather conditions and other
factors beyond the control of the Company. These other factors
include the rate of inflation, and adverse changes in the business
or financial condition of the Company.

These factors are not necessarily all of the important factors that
could cause actual results to differ significantly from those
expressed in any forward-looking statements. Other unknown or
unpredictable factors could also have a significant adverse effect
on future results. The Company does not undertake an obligation to
update forward-looking information contained herein or elsewhere to
reflect actual results, changes in assumptions or changes in other
factors affecting such forward-looking information.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's financial statements are included in Part IV, Item
14, herein.

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

The Company has not changed its independent auditors or had any
disagreements with them concerning accounting matters and financial
statement disclosures within the last 24 months.

PART III

The Company, as the wholly owned subsidiary of a reporting person,
is entitled to omit all information requested in Part III (Items 10-13).

PART IV

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

(a)(1)(2) Financial Statements and Financial Statement Schedules.
The financial
statements identified on the List of Financial Statements are filed as
part of this Report.

(a)(3) Exhibits. The following is a list of exhibits required to
be filed as a part of this Report in Item 14(c).

Exhibit No. Exhibit

2.*1 Agreement of Transfer among Mountain Fuel Supply Company,
Entrada Industries, Inc. and Mountain Fuel Resources, Inc.,
dated July 1, 1984. (Exhibit No. 2. to Registration
Statement No. 2-96102 filed February 27, 1985.)

3.* Restated Articles of Incorporation dated November 17, 1995.
(Exhibit No. 3. to Form 10-K Annual Report for 1995.)

3.3.* Bylaws (as amended on August 11, 1992). (Exhibit No. 3. to
Form 10-Q Report for quarter ended June 30, 1992.)

4.1.*2 Indenture dated June 1, 1990, for 9-7/8% Debentures due
2020, with Morgan Guaranty Trust Company of New York as
Trustee. (Exhibit No. 4. to Form 10-Q Report for quarter
ended June 30, 1990.)

4.2.*2 Indenture dated as of June 1, 1991, for 9-3/8% Debentures
due June 1, 2021, with Morgan Guaranty Trust Company of New
York as Trustee. (Exhibit No. 4. to Form 10-Q Report for
quarter ended June 30, 1991.)

4.3.* Indenture dated as of August 17, 1998, with First Security
Bank, N.A., as Trustee, for Debt Securities. (Exhibit No.
4.01. to Registration Statement on Form S-3 (No. 333-61621)
filed August 17, 1998.)

10.1.*1,3 Overthrust Pipeline Company General Partnership Agreement
dated September 20, 1979, as amended and restated as of
October 11, 1982, and as amended August 21, 1991, among CIG
Overthrust, Inc., Columbia Gulf Transmission Company;
Mountain Fuel Resources, Inc.; NGPL-Overthrust Inc.;
Northern Overthrust Pipeline Company; and Tennessee
Overthrust Gas Company. (Exhibit No. 10.4. to Form 10-K
Annual Report for 1985, except that the amendment dated
August 21, 1991, is included as Exhibit No. 10.4. to Form
10-K Annual Report for 1992.)

10.2.*4 Joint Annual Management Incentive Plan adopted by Questar
Pipeline Company, Questar Gas Company, and Questar Regulated
Services Company, as amended and restated effective May 18,
1999. (Exhibit No. 10.1. to Form 10-Q Report for quarter
ended June 30, 1999.)

10.3.* Partnership Agreement for the TransColorado Gas Transmission
Company dated July 1, 1997, between KN TransColorado, Inc.
and Questar TransColorado, Inc. (Exhibit No. 10.4. to Form
10-K Annual Report for 1997.)

10.4.* Letter of Understanding dated July 13, 1998, on Issues
Relating to Phase II of TransColorado between Questar
TransColorado, Inc. and KN TransColorado, Inc. (Exhibit No.
10.1. to Form 10-Q Report for quarter ended June 30, 1998.)

10.5.5* Firm Transportation Service Agreement with Mountain Fuel
Supply Company under Rate Schedule T-1 dated August 10,
1993. (Exhibit No. 10.5. to Form 10-K Annual Report for
1993.)

10.6.*5 Storage Service Agreement with Mountain Fuel Supply Company
under Rate Schedule FSS, for 3.5 Bcf of working gas capacity
at Clay Basin, with a term from September 1, 1993, through
August 31, 2008. (Exhibit No. 10.6. to Form 10-K Annual
Report for 1993.)

10.7.*5 Storage Service Agreement with Mountain Fuel Supply Company
under Rate Schedules FSS, for 3.5 Bcf of working gas
capacity at Clay Basin with a term from September 1, 1993,
through August 31, 2013. (Exhibit No. 10.7. to Form 10-K
Annual Report for 1993.)

10.8.*5 Storage Service Agreement with Mountain Fuel Supply Company
under Rate Schedule FSS, for 5.5 Bcf of working gas capacity
at Clay Basin, with a term from May 15, 1994 through May 14,
2019. (Exhibit No. 10.8. to Form 10-K Annual Report for
1995.)

10.9.*4 Questar Pipeline Company Deferred Compensation Plan for
Directors, as amended and restated May 19, 1998. (Exhibit
No. 10.3. to Form 10-Q Report for quarter ended June 30,
1998.)

10.10.* Agreement for the Transfer of Assets between Questar
Pipeline Company and Questar Gas Management Company, as
amended, effective March 1, 1996. (Exhibit No. 10.11. to
Form 10-K Annual Report for 1996.)

10.11.* Asset Purchase Agreement dated October 23, 1998, between
Questar Line 90 Company, a wholly-owned subsidiary, and ARCO
Pipeline Company. (Exhibit No. 10.5. to Form 10-Q Report
for quarter ended September 30, 1998.)

12. Ratio of Earnings to Fixed Charges.

21. Subsidiary Information.

23. Consent of Independent Auditors

24. Power of Attorney.

27. Financial Data Schedule.
_______________

*Exhibits so marked have been filed with the Securities and
Exchange Commission as part of the indicated filing and are incorporated
herein by reference.

1The documents listed here have not been formally amended to refer
to the Company's current name. They still refer to the Company as
Mountain Fuel Resources, Inc.

2First Security Bank, N.A., serves as the successor trustee.

3The Overthrust Partnership Agreement has not been formally
amended to delete the names of Columbia Gulf Transmission Company,
Tennessee Overthrust Gas Company, and Northern Overthrust Pipeline
Company as partners.

4Exhibit so marked is management contract or compensation plan or
arrangement.

5Agreement incorporates specified terms and conditions of Questar
Pipeline's FERC Gas Tariff, First Revised Volume No. 1. The tariff
provisions are not filed as part of the exhibit, but are available upon
request.

(b) The Company did not file a Current Report on Form 8-K during
the last quarter of 1999.

ANNUAL REPORT ON FORM 10-K

ITEM 8, ITEM 14(a) (1) and (2), and (d)

LIST OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

YEAR ENDED DECEMBER 31, 1999

QUESTAR PIPELINE COMPANY

SALT LAKE CITY, UTAH

FORM 10-K -- ITEM 14 (a) (1) AND (2)

QUESTAR PIPELINE COMPANY AND SUBSIDIARIES

LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES

The following financial statements of Questar Pipeline Company are
included in Item 8:

Consolidated statements of income -- Years ended December 31,
1999, 1998 and 1997

Consolidated balance sheets -- December 31, 1999 and 1998

Consolidated statements of cash flows -- Years ended December 31,
1999, 1998 and 1997

Consolidated statements of shareholder's equity -- Years ended
December 31, 1999, 1998 and 1997

Notes to consolidated financial statements

All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and
therefore have been omitted.

Report of Independent Auditors

Board of Directors
Questar Pipeline Company

We have audited the accompanying balance sheets of Questar Pipeline
Company as of December 31, 1999 and 1998, and the related statements of
income and common shareholder's equity and cash flows for each of the
three years in the period ended December 31, 1999. 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 auditing standards generally
accepted in the United States. 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, the financial statements referred to above present
fairly, in all material respects, the financial position of Questar
Pipeline Company at December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.

/s/Ernst & Young
Ernst & Young

Salt Lake City, Utah
February 7, 2000

QUESTAR PIPELINE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
REVENUES
From unaffiliated customers $36,922 $37,156 $36,343
From affiliates 75,238 71,401 69,094
TOTAL REVENUES 112,160 108,557 105,437

OPERATING EXPENSES
Operating and maintenance 38,534 38,832 37,334
Depreciation and amortization 16,743 13,927 14,797
Other taxes 2,488 2,600 2,816
TOTAL OPERATING EXPENSES 57,765 55,359 54,947

OPERATING INCOME 54,395 53,198 50,490

OTHER INCOME 4,229 78 1,323

OPERATIONS OF UNCONSOLIDATED
AFFILIATES
Income (loss) (5,109) 4,011 4,629
Write-down of investment in partnership (49,700)
(54,809) 4,011 4,629

DEBT EXPENSE (17,466) (14,456) (13,536)

INCOME (LOSS) BEFORE
INCOME TAXES (13,651) 42,831 42,906

INCOME TAXES (CREDIT) (5,260) 14,940 16,338

NET INCOME (LOSS) ($8,391) $27,891 $26,568

</TABLE>
See notes to consolidated financial statements.

QUESTAR PIPELINE COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

ASSETS
December 31,
1999 1998

<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $2,387 $9,990
Note receivable from Questar 1,100
Accounts receivable 17,758 20,234
Accounts receivable from affiliates 3,946 1,070
Inventories, at lower of average
cost or market 2,443 2,203
Prepaid expenses and deposits 1,782 1,714
TOTAL CURRENT ASSETS 29,416 35,211

PROPERTY, PLANT AND EQUIPMENT
Transmission 332,271 323,953
Storage 218,513 221,220
Processing 20,493
General and intangible 44,372 44,428
Construction work in progress 82,587 80,855
698,236 670,456
Less allowances for depreciation 228,784 215,589
NET PROPERTY, PLANT AND EQUIPMENT 469,452 454,867

INVESTMENT IN UNCONSOLIDATED
AFFILIATES 11,724 54,712

OTHER ASSETS
Income taxes recoverable from customers 4,323 4,359
Unamortized costs of reacquired debt 4,398 4,717
Other 3,714 3,430
TOTAL OTHER ASSETS 12,435 12,506

$523,027 $557,296
</TABLE>

LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
December 31,
1999 1998

<S> <C> <C>
CURRENT LIABILITIES
Note payable to Questar $42,500 $38,000
Accounts payable and accrued expenses
Accounts and other payable 7,145 42,882
Accounts payable to affiliates 3,409 3,744
Federal income taxes 1,560 383
Other taxes 1,471 3,039
Accrued interest 1,621 999
Total accounts payable and
accrued expenses 15,206 51,047
TOTAL CURRENT LIABILITIES 57,706 89,047

LONG-TERM DEBT 245,001 202,991

OTHER LIABILITIES 3,118 4,546

DEFERRED INCOME TAXES 49,891 63,510

COMMITMENTS AND CONTINGENCIES - Note 6

COMMON SHAREHOLDER'S EQUITY
Common stock - par value $1 per share;
authorized 25,000,000 shares; issued
and outstanding 6,550,843 shares 6,551 6,551
Additional paid-in capital 82,034 82,034
Retained earnings 78,726 108,617
TOTAL COMMON SHAREHOLDER'S EQUITY 167,311 197,202

$523,027 $557,296
</TABLE>
See notes to consolidated financial statements.

QUESTAR PIPELINE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings
(In Thousands)
<S> <C> <C> <C>
Balance at January 1, 1997 $6,551 $82,034 $95,908
1997 net income 26,568
Cash dividends (20,750)
Balance at December 31, 1997 6,551 82,034 101,726
1998 net income 27,891
Cash dividends (21,000)
Balance at December 31, 1998 6,551 82,034 108,617
1999 net loss (8,391)
Cash dividends (21,500)
Balance at December 31, 1999 $6,551 $82,034 $78,726

</TABLE>
See notes to consolidated financial statements.

QUESTAR PIPELINE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ($8,391) $27,891 $26,568
Depreciation and amortization 17,847 14,977 15,886
Deferred income taxes (13,619) 1,212 1,526
Write-down of investment in partnership 49,700
(Income) loss from unconsolidated
affiliates, net of cash distributions 7,701 (1,735) (4,413)

53,238 42,345 39,567
Changes in operating assets and liabilities
Accounts receivable (400) (10,453) (3,068)
Federal income taxes 1,177 321 508
Prepaid expenses and deposits (68) 321 (97)
Accounts payable and accrued expenses (37,018) 28,847 4,851
Other (1,586) (398) 1,475
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 15,343 60,983 43,236

INVESTING ACTIVITIES
Capital expenditures
Property, plant and equipment (36,010) (88,318) (26,382)
Other investments (14,414) (26,000) (6,214)
Total capital expenditures (50,424) (114,318) (32,596)
Proceeds from (costs of) disposition
of property, plant and equipment 3,578 (3,350) 635
NET CASH USED IN INVESTING
ACTIVITIES (46,846) (117,668) (31,961)

FINANCING ACTIVITIES
Change in note receivable from Questar (1,100)
Change in note payable to Questar 4,500 12,200 14,000
Long-term debt issued 42,000 88,400
Long-term debt repaid (20,000)
Payment of dividends (21,500) (21,000) (20,750)
NET CASH PROVIDED FROM (USED IN)
FINANCING ACTIVITIES 23,900 59,600 (6,750)
Change in cash and
short-term investments (7,603) 2,915 4,525
Beginning cash and
short-term investments 9,990 7,075 2,550
ENDING CASH AND SHORT-TERM
INVESTMENTS $2,387 $9,990 $7,075
</TABLE>
See notes to consolidated financial statements.

QUESTAR PIPELINE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Accounting Policies

Principles of Consolidation: The consolidated financial statements
contain the accounts of Questar Pipeline Company and subsidiaries
(the Company or Questar Pipeline). The Company is a wholly-owned
subsidiary of Questar Regulated Services Company (Regulated
Services). Regulated Services is a holding company and
wholly-owned subsidiary of Questar Corporation (Questar). Regulated
Services was organized in 1996 and provides administrative,
accounting, engineering, legal and regulatory functions for its
three subsidiaries, Questar Pipeline, Questar Gas Company (Questar
Gas) and Questar Energy Services. Questar Pipeline provides storage
and interstate transportation of natural gas. A subsidiary, Questar
Transportation Services, operates a plant designed to remove carbon
dioxide from a pipeline. A subsidiary, Questar Line 90 Company, has
acquired an oil pipeline and another subsidiary, Questar Southern
Trails Pipeline Company, will be the operator of the pipeline. All
significant intercompany balances and transactions have been
eliminated in consolidation.

Investment in Unconsolidated Affiliates: Questar Pipeline
increased its ownership in the Overthrust Pipeline partnership to
72%. The Company acquired an additional 18% interest from another
partner effective January 1, 2000. Questar Pipeline is the
operator of the Overthrust Segment of the Trailblazer Pipeline
System. Approval of all partners is required for all substantive
policy matters. Questar Pipeline, through a subsidiary,
TransColorado Gas Transmission Company, owns 50% of the
TransColorado Pipeline. Generally, the Company's investment in
these affiliates equals the underlying equity in net assets, except
for TransColorado where the investment was written down. The
Company experienced an other-than-temporary decline in its
partnership investment caused by low volumes resulting from
unfavorable regional transportation economics.

Regulation: Questar Pipeline is regulated by the Federal Energy
Regulatory Commission (FERC) which establishes rates for the
transportation and storage of natural gas. The FERC also
regulates, among other things, the extension and enlargement or
abandonment of jurisdictional natural gas facilities. Regulation is
intended to permit the recovery, through rates, of the cost of
service including a rate of return on investment. The financial
statements are presented in accordance with regulatory
requirements. Methods of allocating costs to time periods, in order
to match revenues and expenses, may differ from those of
nonregulated businesses because of cost allocation methods used in
establishing rates.

Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets and liabilities and disclosure of contingent
liabilities reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

Revenue Recognition: Revenues are recognized in the period that
services are provided or products are delivered. Questar Pipeline
periodically collects revenues subject to possible refunds pending
final orders from the FERC. The Company establishes reserves for
revenues collected subject to refund.

Cash and Short-Term Investments: Short-term investments consist
principally of repurchase agreements with maturities of three
months or less.

Property, Plant and Equipment: Property, plant and equipment is
stated at cost. The provision for depreciation is based upon
rates, which will systematically charge the costs of assets over
their estimated useful lives. The costs of property, plant and
equipment are depreciated in the financial statements using the
straight-line method, ranging from 3% to 33% per year and averaging
3.4% in 1999.

Allowance for Funds Used During Construction: The Company
capitalized the cost of capital during the construction period of
plant and equipment, which amounted to $4,337,000 in 1999, $686,000
in 1998, and $387,000 in 1997.

Reacquisition of Debt: Gains and losses on the reacquisition of
debt are deferred and amortized as debt expense over the remaining
life of the issue in order to match regulatory treatment.

Income Taxes: Questar Pipeline records cumulative increases in
deferred taxes as income taxes recoverable from customers. The
Company has adopted procedures with its regulatory commissions to
include under-and over-provided deferred taxes in customer rates on
a systematic basis. Questar Pipeline uses the deferral method to
account for investment tax credits as required by the FERC. The
Company's operations are consolidated with those of Questar and its
subsidiaries for income tax purposes. The income tax arrangement
between Questar Pipeline and Questar provides that amounts paid to
or received from Questar are substantially the same as would be
paid or received by the Company if it filed a separate return.
Questar Pipeline also receives payment for tax benefits used in the
consolidated tax return even if such benefits would not have been
usable had the Company filed a separate return.

Note 2 - Investment in Unconsolidated Affiliates

Questar Pipeline, through its subsidiaries, has interests in
partnerships accounted for on the equity basis. Transportation of
natural gas is the primary business activity of these partnerships.

Summarized information of the partnerships follow:
<TABLE>
<CAPTION>
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
Year Ended December 31,
Revenues $10,676 $7,958 $6,302
Operating income (loss) (3,315) 3,209 1,927
Income (loss) (10,014) 8,601 10,122

At December 31,
Current assets $5,762 $12,933 $5,291
Total assets 325,371 293,034 75,370
Current liabilities 24,237 21,751 20,333
Total liabilities 248,503 181,967 20,504

</TABLE>

Note 3 - Debt

Questar Pipeline also invests excess cash balances with Questar.
The funds are centrally managed by Questar and earn an interest
rate that is identical to the interest rate paid by the
subsidiaries borrowing from Questar. Note receivable from Questar
as of December 31, 1999 amounted to $1.1 million.

Questar Pipeline filed a shelf-registration statement with the
Securities and Exchange Commission for the issuance of up to $175
million in medium-term notes effective September 2, 1998. Questar
Pipeline issued $42 million in 1999 and $88.4 million of
medium-term notes in 1998.

The details of long-term debt at December 31 were
as follows:
<TABLE>
<CAPTION>
1999 1998
(In Thousands)
<S> <C> <C>
Medium-term notes 5.85% to 7.55%,
due 2008 to 2019 $130,400 $88,400
9 3/8% debentures due 2021 85,000 85,000
9 7/8% debentures due 2020 30,000 30,000
Total long-term debt outstanding 245,400 203,400
Less unamortized debt discount 399 409
$245,001 $202,991
</TABLE>

Yearly sinking fund redemptions of the 9 3/8% debt begin in 2002 in
the amount of $4,250,000. There are no debt provisions restricting
the payment of dividends. Cash paid for interest was $19,030,000
in 1999, $14,761,000 in 1998 and $13,351,000 in 1997.

At December 31, 1999, Questar Pipeline guaranteed $100 million of
long-term debt borrowed by TransColorado Gas Transmission Company.
The partnership has borrowed $200 million under a three-year
revolving-credit arrangement dated October 1998.

Note 4 - Financial Instruments

The carrying amounts and estimated fair values of
the Company's financial instruments at December 31
were as follows:
<TABLE>
<CAPTION>
1999 1998
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
(In Thousands)
<S> <C> <C> <C> <C>
Financial assets
Cash and short-term investments $2,387 $2,387 $9,990 $9,990
Financial liabilities
Short-term loans 42,500 42,500 38,000 38,000
Long-term debt 245,001 240,602 202,991 218,309
</TABLE>

The Company used the following methods and assumptions in
estimating fair values: (1) Cash and short-term investments and
short-term loans - the carrying amount approximates fair value; (2)
Long-term debt - the fair value of long-term debt is based on
quoted market prices. Fair value is calculated at a point in time
and does not represent the amount the Company would pay to retire
the debt securities.

Credit Risk: Questar Pipeline's primary market areas are the Rocky
Mountain and southwestern regions of the United States. The
Company's exposure to credit risk may be impacted by the
concentration of customers in these regions due to changes in
economic or other conditions. The Company's customers may be
affected differently by changing conditions. Management believes
that its credit-review procedures, loss reserves and collection
procedures have adequately provided for usual and customary
credit-related losses.

Note 5 - Income Taxes

The components of income taxes for years ended
December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
Federal
Current $7,852 $12,341 $13,247
Deferred (13,466) 1,257 1,273
State
Current 721 1,108 1,542
Deferred (367) 234 276
($5,260) $14,940 $16,338
</TABLE>

The difference between income tax expense and the tax computed by
applying the statutory federal income tax rate of 35% to income
(loss) before income taxes is explained as follows:

<TABLE>
<CAPTION>
1999 1998 1997
(In Thousands)
<S> <C> <C> <C>
Income (loss) before income taxes ($13,651) $42,831 $42,906

Federal income taxes (credit) at
statutory rate ($4,778) $14,991 $15,017
State income taxes, net of federal
income tax benefit 230 872 1,204
Prior years' tax settlement (410) (388) 134
Other (302) (535) (17)
Income taxes ($5,260) $14,940 $16,338

Effective income tax rate 38.5% 34.9% 38.1%
</TABLE>

Significant components of the Company's deferred tax liabilities
and assets at December 31 were as
follows:
<TABLE>
<CAPTION>
1999 1998
(In Thousands)
<S> <C> <C>
Property, plant and equipment $66,008 $57,033
Other 7,173 6,879
Total deferred tax liabilities 73,181 63,912

Deferred tax assets
Associated with write-down
of investment in partnership 18,400
Capitalized A & G and other 4,890 402
Total deferred tax assets 23,290 402
Net deferred tax liabilities $49,891 $63,510
</TABLE>

Cash paid for income taxes was $7,353,000 in 1999, $13,004,000 in
1998 and $13,844,000 in 1997.

Note 6 - Rate Matters, Litigation and Commitments

A subsidiary of Questar Pipeline, Questar Southern Trails Pipeline
Company, filed an application with the FERC in January 1999
requesting permission to convert a 700-mile crude oil pipeline,
extending from New Mexico to Long Beach, California, to carry
natural gas. The application also seeks authority to install
required compression equipment and to upgrade the system to carry
120 MMDth of gas per day on the western segment and up to 87.5
MMDth per day on the eastern segment. A preliminary determination
on non-environmental issues was ordered by the FERC October 15,
1999 that provided a favorable outcome. The environmental process
is continuing and the FERC will not grant a final certificate until
the environmental review process is completed. A certificate could
be granted in the late in 2000. Because of the time necessary to
obtain regulatory approval, meet construction schedules and gauge
current market conditions, Questar Pipeline does not expect to have
the line in service before mid-2001.

Overthrust Pipeline, a pipeline partnership operated by Questar
Pipeline, filed a general rate case on October 1, 1999 requesting a
$1 million increase in annual rates. Hearings before the FERC are
scheduled for August 21, 2000. Overthrust is seeking a settlement
with the FERC and shippers prior to the August 2000 hearing date.

Questar Pipeline last filed a general rate case in 1995, and the
FERC granted an 11.75% return on equity.

Questar and its affiliates are involved in several cases filed by
an independent producer, Jack Grynberg. The first case resulted in
an adverse jury verdict in 1994; the presiding federal district
court judge in Wyoming entered a judgment as a matter of law that
vacated most portions of the original jury verdicts. The Tenth
Circuit Court of Appeals, in January of 2000, reinstated some
portions of the original jury verdict. Specifically, the appellate
court reversed the trial court's judgment on take-or-pay, breach of
contract, intentional interference with a contract, and price on
deregulation claims. The Tenth Circuit upheld the district court's
determination on duty to decontrol, working interest ownership, and
stolen gas claims. The final judgment will be paid by Questar Gas,
who assumed all of the Company's gas supply functions after the
issuance of FERC Order 636.

Questar Gas, as a result of acquiring Questar Pipeline's gas
purchase contracts, is liable for the judgment, which it estimates
at $5.1 million, when interest is added to the portions of the jury
verdict that were reinstated on appeal. Questar Gas plans to
include any amounts that it is required to pay to Grynberg in its
gas purchase balancing account.

Grynberg filed a second case before the same federal district court
in 1997, alleging new claims, including antitrust and fraud, in
addition to the same claims raised in the initial litigation for a
later period of time. This case has been stayed pending the outcome
of the Tenth Circuit appeal, although the district court did rule
favorably on Questar's motion for a partial summary judgment.

Questar affiliates are also named defendants in a lawsuit filed by
Grynberg under the Federal False Claims Act. This case and the 75
substantially similar cases filed by Grynberg against pipelines and
their affiliates have been consolidated for discovery and pre-trial
rulings in Wyoming federal district court. The cases involve
allegations of industry-wide mismanagement of the value of gas on
which royalty payments are due the federal government. The
complaint also seeks treble damages and imposition of civil
penalties.

It is too early to estimate the outcome of the various cases filed
by Grynberg against Questar affiliates, with the exception of the
first case that has been resolved by the Tenth Circuit.

There are various other legal proceedings against Questar Pipeline.
While it is not currently possible to predict or determine the
outcomes of these proceedings, it is the opinion of management that
the outcomes will not have a material adverse effect on the
Company's results of operations, financial position or liquidity.

Note 7 - Employment Benefits

Pension Plan: Substantially all of Questar Pipeline's employees are
covered by Questar's defined benefit pension plan. Benefits are
generally based on years of service and the employee's 72-pay
period interval of highest earnings during the ten years preceding
retirement. It is Questar's policy to make contributions to the
plan at least sufficient to meet the minimum funding requirements
of applicable laws and regulations. Plan assets consist principally
of equity securities and corporate and U.S. government debt
obligations.

Questar Pipeline's portion of plan assets and benefit obligations
is not determinable because the plan assets are not segregated or
restricted to meet the Company's pension obligations. If the
Company were to withdraw from the pension plan, the pension
obligation for the Company's employees would be retained by the
pension plan. At December 31, 1999, Questar's fair value of plan
assets exceeded the net benefit obligation.

Eligible employees in Regulated Services were offered an
early-retirement program that was effective July 31, 1998.
Enhanced benefits were paid to 178 employees taking advantage of
the offer. Costs associated with the early-retirement program are
being amortized over a five-year period in accordance with
anticipated regulatory treatment.

Pension cost was $411,000 in 1999, $382,000 in 1998 and $520,000 in
1997.

Postretirement Benefits Other Than Pensions: Generally
postretirement health-care benefits and life insurance are provided
only to employees hired before January 1, 1997. Questar Pipeline
pays a portion of postretirement health-care costs as determined by
an employee's years of service and limited to 170% of the 1992
contribution. The Company's policy is to fund amounts allowable for
tax deduction under the Internal Revenue Code. Plan assets consist
of equity securities, and corporate and U.S. government debt
obligations. The Company is amortizing the transition obligation
over a 20-year period, which began in 1992. The FERC allows
rate-recovery of future postretirement benefits costs to the extent
that contributions are made to an external trust. Questar Pipeline
has recorded a $1.1 million regulatory liability as of December 31,
1999. As a result of returns earned on investments, the Company
recorded a $223,000 expense reduction in 1999. Costs of
postretirement benefits other than pensions were $69,000 in 1998
and $257,000 in 1997.

Questar Pipeline's portion of plan assets and benefit obligations
related to postretirement medical and life insurance benefits is
not determinable because the plan assets are not segregated or
restricted to meet the Company's obligations.

Postemployment Benefits: Questar Pipeline recognizes the net
present value of the liability for postemployment benefits, such as
long-term disability benefits and health-care and life-insurance
costs, when employees become eligible for such benefits.
Postemployment benefits are paid to former employees after
employment has been terminated but before retirement benefits are
paid. The Company accrues both current and future costs. The
Company has a regulatory asset amounting to $671,000 as of December
31, 1999.

Employee Investment Plan: The Company participates in Questar's
Employee Investment Plan (Plan), which allows eligible employees to
purchase Questar common stock or other investments through payroll
deduction. The Company makes matching contributions of Questar
common stock to the Plan of approximately 75%, increasing to 80% in
1999, of the employees' purchases and contributes an additional
$200 of common stock in the name of each eligible employee. The
Company's expense and contribution to the plan was $281,000 in
1999, $302,000 in 1998 and $348,000 in 1997.

Note 8 - Related-Party Transactions

Regulated Services began providing administrative, technical and
accounting support in 1997 and legal and regulatory support in
1998. Regulated Services charged Questar Pipeline $22,623,000 in
1999, $15,271,000 in 1998 and $12,895,000 in 1997. The majority of
these costs are allocated and included in operating and maintenance
expenses. The allocation methods are based on several methods
dictated by the nature of the charges. Management believes that the
allocation methods are reasonable.

Questar Pipeline receives a substantial portion of its revenues
from Questar Gas Company. Revenues received from Questar Gas
amounted to $71,636,000 in 1999, $67,528,000 in 1998 and
$64,924,000 in 1997. The Company also received revenues from other
affiliated companies totaling $3,602,000 in 1999, $3,873,000 in
1998 and $4,170,000 in 1997.

Questar performs certain administrative functions for Questar
Pipeline. The Company was charged for its allocated portion of
these services which totaled $2,424,000 in 1999, $2,173,000 in 1998
and $2,748,000 in 1997. These costs are included in operating and
maintenance expenses and are allocated based on each affiliate's
proportional share of revenues, net of gas costs; property, plant
and equipment; and payroll. Management believes that the allocation
method is reasonable.

Questar InfoComm Inc is an affiliated company that provides data
processing and communication services to Questar Pipeline. Direct
charges paid by the Company to Questar InfoComm amounted to
$8,345,000 in 1999, $10,548,000 in 1998 and $9,458,000 in 1997.

Questar Pipeline has a 12-year lease with an option for renewal
with an affiliate for some space in an office building located in
Salt Lake City, Utah. The annual lease payment in 1999 and for the
next four years is $580,000.

The Company incurred debt expense payable to Questar of $2,087,000
in 1999, $2,420,000 in 1998 and $348,000 in 1997.

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, on the 28th day of March, 2000.

QUESTAR PIPELINE COMPANY
(Registrant)

By /s/ D. N. Rose
D. N. Rose
President & Chief Executive Officer

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 date
indicated.

/s/ D. N. Rose President & Chief Executive Officer;
D. N. Rose Director (Principal Executive Officer)

/s/ S. E. Parks Vice President, Treasurer and Chief
S. E. Parks Financial Officer (Principal
Financial Officer)

/s/ G. H. Robinson Vice President and Controller
G. H. Robinson (Principal Accounting Officer)

*R. D. Cash Chairman of the Board; Director
*U. Edwin Garrison Director
*Marilyn S. Kite Director
*Scott S. Parker Director
*D. N. Rose Director

March 28, 2000 *By /s/ D. N. Rose
Date D. N. Rose, Attorney in Fact

EXHIBIT INDEX

Exhibit
Number Exhibit

3.* Restated Articles of Incorporation dated November 17, 1995.
(Exhibit No. 3. to Form 10-K Annual Report for 1995.)

3.3.* Bylaws (as amended on August 11, 1992). (Exhibit No. 3. to
Form 10-Q Report for quarter ended June 30, 1992.)

4.1.*2 Indenture dated June 1, 1990, for 9-7/8% Debentures due
2020, with Morgan Guaranty Trust Company of New York as
Trustee. (Exhibit No. 4. to Form 10-Q Report for quarter
ended June 30, 1990.)

10.5.5* Firm Transportation Service Agreement with Mountain Fuel
Supply Company under Rate Schedule T-1 dated August 10,
1993. (Exhibit No. 10.5. to Form 10-K Annual Report for
1993.)

10.9.*4 Questar Pipeline Company Deferred Compensation Plan for
Directors, as amended and restated May 19, 1998. (Exhibit
No. 10.3. to Form 10-Q Report for quarter ended June 30,
1998.)

12. Ratio of Earnings to Fixed Charges.

21. Subsidiary Information.

23. Consent of Independent Auditors

24. Power of Attorney.

27. Financial Data Schedule.
_______________

*Exhibits so marked have been filed with the Securities and
Exchange Commission as part of the indicated filing and are incorporated
herein by reference.

1The documents listed here have not been formally amended to refer
to the Company's current name. They still refer to the Company as
Mountain Fuel Resources, Inc.

2First Security Bank, N.A., serves as the successor trustee.

4Exhibit so marked is management contract or compensation plan or
arrangement.

(b) The Company did not file a Current Report on Form 8-K during
the last quarter of 1999.

Exhibit No. 12.

Questar Pipeline Company and Subsidiaries
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
12 months ended December 31,
1999 1998 1997
(Dollars in Thousands)

Earnings
<S> <C> <C> <C>
Income (loss) before income taxes ($13,651) $42,831 $42,906
Plus debt expense 17,466 14,456 13,536
Plus allowance for borrowed
funds used during construction 2,677 625 210
Plus interest portion of rental expense 173 342 261
$6,665 $58,254 $56,913

Fixed Charges

Debt expense $17,466 $14,456 $13,536
Plus allowance for borrowed
funds used during construction 2,677 625 210
Plus interest portion of rental expense 173 342 261
$20,316 $15,423 $14,007

Ratio of Earnings to Fixed Charges 0.33 3.78 4.06
</TABLE>

SUBSIDIARY INFORMATION
Registrant Questar Pipeline Company has four subsidiaries:
Questar TransColorado, Inc., Questar Line 90 Company, Questar Southern
Trails Company, and Questar Transportation services Company, which are
all Utah corporations.

Exhibit 23.

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 333-61621) of Questar Pipeline Company and in
the related Prospectus of our report dated February 7, 2000, with
respect to the consolidated financial statements of Questar Gas Company
included in this annual Report (Form 10-K) for the year ended December
31, 1999.

Salt Lake City, Utah
March 28, 2000

POWER OF ATTORNEY

We, the undersigned directors of Questar Pipeline Company, hereby
severally constitute D. N. Rose and S. E. Parks, and each of them acting
alone, our true and lawful attorneys, with full power to them and each
of them to sign for us, and in our names in the capacities indicated
below, the Annual Report on Form 10-K for 1999 and any and all
amendments to be filed with the Securities and Exchange Commission by
Questar Pipeline Company, hereby ratifying and confirming our signatures
as they may be signed by the attorneys appointed herein to the Annual
Report on Form 10-K for 1999 and any and all amendments to such Report.

Witness our hands on the respective dates set forth below.

Signature Title Date

/s/ R. D. Cash Chairman of the Board 2-8-00
R. D. Cash

/s/ D. N. Rose President and Chief 2-8-00
D. N. Rose Executive Officer
Director

/s/ U. Edwin Garrison Director 2-8-00
U. Edwin Garrison

/s/ Marilyn S. Kite Director 2-8-00
Marilyn S. Kite

/s/ Scott S. Parker Director 2-8-00
Scott S. Parker

<ARTICLE> 5
<LEGEND>
The following schedule contains summarized financial information extracted
from the Questar Pipeline Company Consolidated Statements of Income and
Balance Sheets for the period ended December 31, 1999, and is qualified
in its entirety by reference to such audited financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,387
<SECURITIES> 0
<RECEIVABLES> 22,804
<ALLOWANCES> 0
<INVENTORY> 2,443
<CURRENT-ASSETS> 29,416
<PP&E> 698,236
<DEPRECIATION> 228,784
<TOTAL-ASSETS> 523,027
<CURRENT-LIABILITIES> 57,706
<BONDS> 245,001
0
0
<COMMON> 6,551
<OTHER-SE> 160,760
<TOTAL-LIABILITY-AND-EQUITY> 523,027
<SALES> 0
<TOTAL-REVENUES> 112,160
<CGS> 0
<TOTAL-COSTS> 38,534
<OTHER-EXPENSES> 19,231
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,466
<INCOME-PRETAX> (13,651)
<INCOME-TAX> (5,260)
<INCOME-CONTINUING> (8,391)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,391)
<EPS-BASIC> 0
<EPS-DILUTED> 0

</TABLE>