SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1998

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. 1-935

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

STATE OF UTAH 87-0155877
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

P.O. Box 45360, 180 East 100 South, Salt Lake City, Utah84145-0360
(Address of principal executive offices) (Zip Code)

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

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

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of June 30, 1998
Common Stock, $2.50 par value 9,189,626 shares

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

PART I FINANCIAL INFORMATION
Item 1. Financial Statements

QUESTAR GAS COMPANY
STATEMENTS OF INCOME
(Unaudited)

3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1998 1997 1998 1997 1998 1997
(In Thousands)

REVENUES $74,387 $63,323 $266,176 $238,636 $475,763 $407,734

OPERATING EXPENSES
Natural gas purchases 41,965 29,669 160,063 126,880 282,116 208,671
Operating and maintenance 23,735 25,802 49,012 53,206 97,525 101,149
Depreciation 7,697 7,369 15,528 15,302 31,386 29,668
Other taxes 2,531 2,546 4,903 5,289 7,788 7,509

TOTAL OPERATING EXPENSES 75,928 65,386 229,506 200,677 418,815 346,997

OPERATING INCOME (LOSS) (1,541) (2,063) 36,670 37,959 56,948 60,737

INTEREST AND OTHER INCOME 1,296 1,016 2,028 1,739 3,677 2,173

DEBT EXPENSE (4,570) (4,465) (9,696) (8,807) (20,008) (17,271)

INCOME (LOSS) BEFORE
INCOME TAXES (4,815) (5,512) 29,002 30,891 40,617 45,639

INCOME TAXES (CREDITS) (2,434) (2,909) 10,669 11,185 12,976 15,179

NET INCOME (LOSS) ($2,381) ($2,603) $18,333 $19,706 $27,641 $30,460

See note to financial statements

QUESTAR GAS COMPANY
CONDENSED BALANCE SHEETS
(Unaudited)

June 30, December 31,
1998 1997 1997
(In Thousands)

ASSETS
Current assets
Cash and short-term investments $6,747
Accounts receivable $36,871 $32,626 86,487
Inventories 13,233 10,745 20,347
Purchased-gas adjustments 12,506 48,866 37,251
Other current assets 2,929 2,975 4,356
Total current assets 65,539 95,212 155,188

Property, plant and equipment 900,082 840,247 882,936
Less allowances for depreciation 365,909 339,133 354,761
Net property, plant and equipment 534,173 501,114 528,175

Other assets 23,089 19,514 21,488

$622,801 $615,840 $704,851

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Checks outstanding in excess of
cash balances $5,259 $2,517
Notes payable to Questar
Corporation 25,000 69,900 $100,000
Accounts payable and accrued
expenses 55,515 38,625 64,487
Total current liabilities 85,774 111,042 164,487

Long-term debt 225,000 175,000 225,000
Other liabilities 5,568 11,083 5,989
Deferred income taxes and investment
tax credits 77,110 89,901 87,109
Redeemable cumulative preferred stock 4,808

Common shareholder's equity
Common stock 22,974 22,974 22,974
Additional paid-in capital 41,875 41,875 41,875
Retained earnings 164,500 159,157 157,417
Total common shareholder's equity 229,349 224,006 222,266

$622,801 $615,840 $704,851

See note to financial statements

QUESTAR GAS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

6 Months Ended
June 30,
1998 1997
(In Thousands)

OPERATING ACTIVITIES
Net income $18,333 $19,706
Depreciation 16,668 16,637
Deferred income taxes and
investment tax credits (9,999) 8,590
25,002 44,933
Change in operating assets and
liabilities 71,908 (12,612)

NET CASH PROVIDED FROM
OPERATING ACTIVITIES 96,910 32,321

INVESTING ACTIVITIES
Capital expenditures (24,974) (20,985)
Proceeds from disposition of
property, plant and equipment 2,308 2,534

NET CASH USED IN INVESTING
ACTIVITIES (22,666) (18,451)

FINANCING ACTIVITIES
Checks outstanding in excess of
cash balances 5,259 2,517
Decrease in notes payable
to Questar Corporation (75,000) (6,300)
Redemption of preferred stock (20)
Payment of dividends (11,250) (11,942)

NET CASH USED IN FINANCING
ACTIVITIES (80,991) (15,745)

DECREASE IN CASH AND
SHORT-TERM INVESTMENTS ($6,747) ($1,875)

See note to financial statements

QUESTAR GAS COMPANY
NOTE TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)

Note 1 - Basis of Presentation

The interim financial statements furnished reflect all adjustments
which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. All
such adjustments are of a normal recurring nature. Due to the
seasonal nature of the business, the results of operations for the
three-and six-month periods ended June 30, 1998, are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1998. For further information refer to the financial
statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1997.

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

QUESTAR GAS COMPANY
June 30, 1998
(Unaudited)

Operating Results

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

3 Months Ended 6 Months Ended 12 Months Ended
June 30, June 30, June 30,
1998 1997 1998 1997 1998 1997
(Dollars In Thousands)

FINANCIAL RESULTS
Revenues
From unaffiliated customers $74,268 $62,632 $266,057 $236,854 $474,887 $404,128
From affiliates 119 691 119 1,782 876 3,606
Total revenues 74,387 63,323 266,176 238,636 475,763 407,734
Natural gas purchases 41,965 29,669 160,063 126,880 282,116 208,671
Revenues less natural gas
purchases $32,422 $33,654 $106,113 $111,756 $193,647 $199,063
Operating income (loss) ($1,541) ($2,063) $36,670 $37,959 $56,948 $60,737
Net income (loss) (2,381) (2,603) 18,333 19,706 27,641 30,460

OPERATING STATISTICS
Natural gas volumes (in thousands of
decatherms)
Residential and commercial sales 13,178 12,157 47,492 48,562 84,677 82,998
Industrial sales 2,267 2,104 5,097 5,006 9,614 9,238
Transportation for industrial
customers 13,115 11,625 27,947 24,577 54,683 49,301
Total deliveries 28,560 25,886 80,536 78,145 148,974 141,537
Natural gas revenue (per decatherm)
Residential and commercial $4.70 $4.31 $5.06 $4.43 $5.02 $4.36
Industrial sales 2.90 2.30 3.01 2.34 2.92 2.25
Transportation for industrial
customers 0.11 0.12 0.11 0.13 0.12 0.12
Heating degree days
Actual 899 678 3,291 3,133 5,623 5,227
Normal 741 741 3,484 3,484 5,801 5,801
Colder (warmer) than normal 21% (9%) (6%) (10%) (3%) (10%)
Number of customers at June 30, 643,696 621,647

Revenues, less natural gas purchases, were $1,232,000 lower in the
second quarter of 1998 and $5,643,000 lower in the 6-month period
ended June 30, 1998 when compared with the same periods in 1997
because of several rate changes affecting the first half of 1998. A
rate surcharge, associated with construction of a distribution
pipeline into southern Utah and in effect for the past 10 years, was
discontinued in September 1997. Some general-service customers, who
met higher load factor standards, shifted to firm commercial rates,
which have a lower margin. Retail usage of gas per customer fell
during the first half of 1998 after reaching an unusually high mark
in the first half of 1997. This is in large part attributable to
reaction to rising gas costs included in rates during the latter part
of 1997 and first part of 1998.

Partially offsetting the rate changes and lower usage per customer
has been the effect of a strong growth rate in the number of
customers served by Questar Gas. The number of customers served grew
by 3.5% from a year ago to 643,696 at June 30, 1998.

Temperatures, as measured in degree days, were colder than normal in
the second quarter of 1998. However, the impact was slight because
temperatures are relatively mild during the second quarter in
comparison with the winter heating season that extends from November
through March. Also, Questar Gas' rates include a
weather-normalization adjustment that reduces the revenue impact of
weather fluctuations. Virtually all of Questar Gas' residential and
commercial volumes were covered under the weather-normalization
adjustment in the first half of both 1998 and 1997.

In March 1998, the Public Service Commission of Wyoming approved
Questar Gas' gas-merchant unbundling proposal that was filed in
Wyoming in 1997. Under this plan, a transportation service option
was extended to residential and commercial customers as well as
industrial customers. Customers choosing transportation service are
allowed to secure gas supplies directly from producers and marketers
and pay Questar Gas a fee for transportation services. Questar Gas
continues to offer a traditional bundled sales service as well. The
unbundling proposal called for an open enrollment period to be held
from March 1 through April 30. However, no suppliers signed up to
provide gas to Wyoming customers. Another open enrollment will be
held next year. Questar expects that the option of unbundled service
in Wyoming will not have a material effect on earnings.

Volumes delivered to industrial customers increased 12% in the first
half of 1998 when compared with the same half of 1997 due to
additions of new customers as well as expanded operations with
several ongoing customers. Margins from gas delivered to industrial
customers are substantially lower than from gas delivered to
residential and commercial customers.

Questar Gas' natural gas purchases were higher in the 1998 periods
presented when compared with the same periods of 1997. Higher gas
purchase prices were paid by the Company as natural gas prices
increased sharply during the 1996-1997 winter-heating season. The
increase in gas costs was first noted as an increase in the
purchased-gas cost account, but was ultimately collected in rates.
Questar Gas' rates include the recovery of gas costs which amounted
to $2.27 per decatherm (dth) in 1998 compared with $1.54 per dth in
1997. Because of lower forecasted gas prices and the fact that past
gas cost increases have been largely recovered, the Company received
approval to reduce gas costs in rates by $1.1 million in Utah and
$356,000 in Wyoming effective July 1, 1998. The Company routinely
files for adjustment of purchased-gas costs with the Utah and Wyoming
Public Service Commissions on a semiannual basis.

Operating and maintenance expenses were lower in the 3- and 6-month
periods of 1998 as a result of capitalizing labor costs associated
with installing computer systems, cost reductions as a result of
sharing services with an affiliated company, capitalizing labor costs
associated with construction projects, lower bad debt costs and not
repeating a 1997 write-off of obsolete inventory. The Company
continues efforts to resolve Year 2000 issues and expects that the
expense of becoming Year 2000 compliant will not be material. Questar
Gas and Questar Pipeline share the costs of certain administrative,
accounting, legal, engineering and related services under Questar
Regulated Services Co.

The Regulated Services group recently completed a voluntary early
retirement program that was effective July 31, 1998. The program
reduced the regulated services work force by more than 10% or 177
employees, which will decrease future operating expenses. The costs
associated with the early retirement program will be deferred and
amortized over a five-year period in accordance with past regulatory
treatment. The deferred annual charge is expected to be more than
offset by lower labor-related costs.

Depreciation expense was higher in the 1998 periods presented when
compared with the 1997 periods primarily as a result of increase
investment in property, plant and equipment. Other taxes, primarily
property taxes, were lower in the second quarter and first half of
1998 as a result of property refunds and lower tax assessments. The
Company sold surplus real estate in the second quarter of 1998
resulting in an $800,000 pretax gain. Interest expense was higher
in the 1998 periods due primarily to an issuance of $50 million of
medium-term notes with an average interest rate of 6.88 % in the
second and third quarters of 1997.

The effective income tax rate was 36.8% in the first half of 1998 and
36.2% in the first half of 1997. The Company recognized $1,089,000
of tight-sands gas-production credits in the 1998 period and
$1,296,000 in the 1997 period.

Questar Gas, as a result of acquiring Questar Pipeline's gas purchase
contracts, is responsible for any judgment rendered against Questar
Pipeline in a lawsuit that was tried before a jury in 1994. In a
ruling issued June 2, 1998, the trial judge set aside all aspects of
the jury's verdict except for $.5 million in favor of a producer
related to certain contractual, take-or-pay issues. Other than on
these take-or-pay matters, a judgment was entered on all other issues
in favor of Questar Pipeline. A notice of appeal has been filed by
the producer.

Liquidity and Capital Resources

Operating Activities

Net cash provided from operating activities of $96,910,000 was
$64,589,000 more than was generated in the same period of 1997. The
increase in cash flow was primarily due to collection of gas costs,
which were under-collected in the first half of 1997.

Investing Activities

Capital expenditures were $24,974,000 in the first half of 1998
compared with $20,985,000 in the corresponding 1997 period. Capital
expenditures for calendar year 1998 are estimated at $66,000,000.

Financing Activities

The Company has a short-term borrowing arrangement with its parent
company, Questar Corporation. As of June 30, Questar Gas had loan
balances outstanding of $25,000,000 in 1998 and $69,900,000 in 1997.
First half financing activities in 1998 and 1997 included payment of
dividends and a partial repayment of loans from Questar using net
cash provided from operations. Capital expenditures for 1998 will be
financed with net cash flow provided from operating activities and
borrowings from Questar.

Forward Looking Statements

This 10-Q contains forward-looking statements about the future
operations and expectations of Questar Gas. 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.

PART II
OTHER INFORMATION

Item 1. Legal Proceedings.

(a) Questar Gas Company (Questar Gas or the Company), on May 29,
1998, filed a semi-annual, gas cost pass-through application with the
Public Service Commission of Wyoming (PSCW). The Company's
application reflected a decrease in its commodity costs, resulting in
an annual revenue decrease of $355,686. The PSCW authorized Questar
Gas to reflect the requested decrease in rates effective July 1, 1998.

(b) On June 12, 1998, Questar Gas filed a semi-annual, gas cost
pass-through application with the Public Service Commission of Utah
(PSCU), seeking to adjust its rates to reflect an annual revenue
decrease of approximately $1,085,000 in its rates. The Company's
application reflected annualized gas costs of $256.7 million, compared
to $259.2 million reflected in its prior gas cost application.
Questar Gas also requested authorization to reduce the surcharge
associated with prior undercollection of its gas costs. By an interim
order dated June 26, 1998, the PSCU authorized the Company to reflect
the requested decrease in its rates effective July 1, 1998.

(c) Additional public hearings in a pending case involving the
Company's gathering rates are scheduled to be held on September 2,
1998, before the PSCU. The case, which involves potential refunds of
up to $7.6 million plus interest, centers on a claim made by the
Division of Public Utilities, a state agency, that a reduction in
gathering rates charged to Questar Gas by an affiliate should be
extended retroactively to March of 1996. (See the Company's Annual
Report on Form 10-K for 1997, page 7, for a discussion of the case.)

(d) On June 2, 1998, the trial court judge entered a judgment
that basically overturned most of a jury verdict rendered against the
Company in late 1994. The case, which Questar Gas inherited when it
acquired the gas purchase contracts of its affiliate, Questar Pipeline
Company (Questar Pipeline), involved claims made by an independent
producer for take or pay, tax reimbursements, contract breach, and
tortious interference with a contract. The jury awarded the producer
approximately $5,500,000 plus interest in compensatory damages and
$200,000 in punitive damages. The judge's order reduced the jury
verdict to an amount less than $500,000. (See the Company's Annual
Report on Form 10-K for 1997, page 12, for a discussion of the case.)
The plaintiff producer has filed a notice of appeal with the Tenth
Circuit Court of Appeals.

The plaintiff producer filed a second case against the Company
and its affiliates in 1997. The second case was also filed in
Wyoming's federal district court and presents some of the same claims
heard in the first case for a subsequent period of time. It also
involves additional claims of fraud and antitrust violation. This
second case has been stayed pending the outcome of the resolution of
issues from the first case.

Item 5. Other Information.

The retirement of Michael E. Benefield, age 59, as an officer and
employee of the Company effective July 31, 1998, led to a
reorganization of responsibilities among the Company's executive
officers. At the time of his retirement, Mr. Benefield was Vice
President, Business Development and Planning, for the Company and its
affiliates, Questar Pipeline and Questar Regulated Services Company
(Regulated Services) and had served in this capacity since May of
1996. He had over 21 years of service with the Company and its
affiliates when he retired.

Ms. Susan Glasmann, age 50, was named to serve as the Company's
Vice President and General Manager, replacing Mr. S. C. Yeager who had
served in this capacity since May of 1996. Ms. Glasmann held the
position of Vice President, Business Support, for two years prior to
being appointed to her new position. Mr. Yeager, age 51, was named to
the position of Vice President, Business Development, for the Company,
Questar Pipeline, and Regulated Services. Mr. Lowell F. Gill, age 55,
was appointed to serve as Vice President, Transportation Operations
for the Company and Regulated Services. Mr. Gill also serves as Vice
President and General Manager of Questar Pipeline. Mr. Gary W.
DeBernardi, age 55, who had formerly served as Vice President,
Technical Support, was named to the position of Vice President,
Technical Services, for the Company, Questar Pipeline, and Regulated
Services.

Messrs. D. N. Rose, S. E. Parks, and Glenn H. Robinson will
continue to serve in their positions as President and Chief Executive
Officer; Vice President, Treasurer, and Chief Financial Officer; and
Vice President and Controller, respectively.

Item 6. Exhibit and Reports on Form 8-K.

(a) The following exhibits have been filed as part of this
report:

Exhibit No.

10.1 Annual Management Incentive Plan adopted by Questar Gas
Company, Questar Pipeline Company and Questar Regulated
Services Company as amended and restated effective May
19, 1998.

10.2. Questar Gas Company Deferred Compensation Plan for
Directors as amended and restated effective May 19,
1998.

(b) The Company did not file any Current Reports on Form 8-K
during the second quarter of 1998.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

QUESTAR GAS COMPANY
(Registrant)

August 14, 1998 /s/D. N. Rose
D. N. Rose
President and Chief Executive
Officer

August 14, 1998 /s/S.E. Parks
S. E. Parks
Vice President, Treasurer, and
Chief Financial Officer