UNITED STATES
                       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 September 30, 1996

                                        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 number 1-7297



                                   NICOR Inc.                     
              (Exact name of registrant as specified in its charter)
       
               Illinois                             36-2855175    
       (State of incorporation)                 (I.R.S. Employer
                                               Identification No.)

           1844 Ferry Road                                     
         Naperville, Illinois                       60563-9600    
        (Address of principal                       (Zip Code)
          executive offices)
       
 
                           (630) 305-9500          
                    (Registrant's telephone number)





Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X] No [ ]
 
Shares of common stock, par value $2.50 outstanding, at October 31, 1996,
were 49,812,109.




                                                                            
                                                                 
NICOR Inc.                                                          Page i  


Table of Contents

                                                                  Page
Part I.    Financial Information                                  

Item 1.    Financial Statements (Unaudited)                         1

           Consolidated Statement of Income -                       
              Three, Nine and Twelve Months Ended
              September 30, 1996 and 1995                           2

           Consolidated Statement of Cash Flows -                   
              Nine and Twelve Months Ended
              September 30, 1996 and 1995                           3

           Consolidated Balance Sheet -                             
              September 30, 1996 and 1995, and 
              December 31, 1995                                     4

           Notes to the Consolidated Financial Statements           5

Item 2.    Management's Discussion and Analysis of                  
              Financial Condition and Results of 
              Operations                                            8

Part II.   Other Information

Item 1.    Legal Proceedings                                       14

Item 6.    Exhibits and Reports on Form 8-K                        14

           Signature                                               15

           Exhibit Index                                           16




Selected terms:
             
Ill.C.C. - Illinois Commerce Commission.

Mcf, Bcf - Thousand cubic feet, billion cubic feet.
             
TEU - Twenty-foot equivalent unit.

Degree days -Number of degrees by which the daily
             mean temperature falls below 65 degrees
             Fahrenheit.





NICOR Inc.                                                            Page 1
 
PART I -Financial Information

Item 1.Financial Statements

       The following condensed unaudited financial statements of
       NICOR Inc. have been prepared by the company pursuant to the rules
       and regulations of the Securities and Exchange Commission (SEC). 
       Certain information and footnote disclosures normally included in
       financial statements prepared in accordance with generally accepted
       accounting principles have been condensed or omitted pursuant to
       SEC rules and regulations.  The condensed financial statements
       should be read in conjunction with the financial statements and the
       notes thereto included in the company's latest Annual Report on
       Form 10-K.

       The information furnished reflects, in the opinion of the company,
       all adjustments (consisting only of normal recurring adjustments)
       necessary for a fair statement of the results for the interim
       periods presented.  Because of seasonal and other factors, the
       results for the interim periods presented are not necessarily
       indicative of the results to be expected for the full fiscal year.




<TABLE>
NICOR Inc.                                                                                    Page 2 

Consolidated Statement of Income (Unaudited)
(Millions, except per share data)
<CAPTION>
                                        Three months ended       Nine months ended      Twelve months ended
                                           September 30             September 30            September 30   
                                         1996       1995          1996       1995         1996        1995   

<S>                                    <C>        <C>           <C>        <C>          <C>         <C>
Operating revenues                     $  220.4   $  157.1      $1,257.8   $1,013.8     $1,724.1    $1,409.3

Operating expenses
  Cost of gas                              75.8       46.3         677.8      527.4        937.6       737.2  
  Operating and maintenance                80.4       67.9         233.5      204.2        316.5       275.5
  Depreciation                             16.5       14.6          87.2       78.6        120.4       109.9
  Taxes, other than income taxes           12.4       10.5          89.9       77.6        116.3       101.3 
                                          185.1      139.3       1,088.4      887.8      1,490.8     1,223.9

Operating income                           35.3       17.8         169.4      126.0        233.3       185.4

Other income (expense)
  Interest income                            .3         .5           1.2        2.6          1.7         3.1
  Other, net                                (.1)        .4          (1.8)        .8           .4         3.1
                                             .2         .9           (.6)       3.4          2.1         6.2
Income before interest on debt
  and income taxes                         35.5       18.7         168.8      129.4        235.4       191.6

Interest on debt, net of 
  amounts capitalized                      11.9        9.4          34.2       30.3         45.7        42.1

Income before income taxes                 23.6        9.3         134.6       99.1        189.7       149.5

Income taxes                                8.5        3.2          48.6       35.0         67.9        50.7

Income from continuing operations          15.1        6.1          86.0       64.1        121.8        98.8

Income from discontinued operations,
  net of income taxes                         -          -          15.0          -         15.0           -

Net income                                 15.1        6.1         101.0       64.1        136.8        98.8

Dividends on preferred stock                 .1         .1            .3         .3           .5          .4 

Earnings applicable to
  common stock                         $   15.0   $    6.0      $  100.7   $   63.8     $  136.3    $   98.4

Average shares of common
  stock outstanding                        50.0       50.4          50.1       50.8         50.2        51.1

Earnings per average share             
  of common stock
    Continuing operations              $    .30   $    .12      $   1.71   $   1.26     $   2.42    $   1.93
    Discontinued operations                   -          -           .30          -          .30           -

                                       $    .30   $    .12      $   2.01   $   1.26     $   2.72    $   1.93

Dividends declared per share
  of common stock                      $    .33   $    .32      $    .99   $    .96     $   1.31    $  1.275



<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
 




<TABLE>
NICOR Inc.                                                                                           Page 3 

Consolidated Statement of Cash Flows (Unaudited)
(Millions)
<CAPTION>
                                                                  Nine months ended     Twelve months ended
                                                                     September 30           September 30   
                                                                   1996        1995       1996        1995 
Operating activities
  <S>                                                            <C>         <C>        <C>         <C>
  Net income                                                     $ 101.0     $  64.1    $ 136.8     $  98.8
    Less income from discontinued operations                        15.0           -       15.0           -
  Income from continuing operations                                 86.0        64.1      121.8        98.8
  Adjustments to reconcile income from continuing operations
    to net cash flow provided from continuing operations:
      Depreciation                                                  87.2        78.6      120.4       109.9
      Deferred income tax expense (benefit)                        (16.6)      (10.8)      (9.0)      (19.8)
      Change in working capital items and other:
        Receivables, less allowances                               119.6       124.3      (47.7)        5.8
        Gas in storage                                             (72.0)       11.1      (76.1)       32.6
        Deferred/accrued gas costs                                 (33.7)       17.4      (25.2)       (2.5)
        Accounts payable                                           (71.3)         .5      (20.8)       22.9
        Gas refunds due customers                                  (24.2)       40.2      (42.5)       39.3
        Other                                                       33.2       (16.6)      54.8        11.4
  Net cash flow provided from continuing operations                108.2       308.8       75.7       298.4
  Net cash flow provided from (used for) discontinued
    operations                                                       1.3        (2.3)        .9        (5.5)
  
  Net cash flow provided from operating activities                 109.5       306.5       76.6       292.9

Investing activities
  Capital expenditures                                             (78.3)     (107.1)    (128.1)     (163.3)
  Short-term investments                                            12.3        13.0        7.5         6.9
  Other                                                             (2.8)         .4       (1.1)         .8

  Net cash flow used for investing activities                      (68.8)      (93.7)    (121.7)     (155.6)
   
Financing activities
  Net proceeds from issuing long-term debt                          74.3        22.5      123.8        22.5
  Disbursements to retire long-term debt                           (50.0)      (62.5)     (50.0)      (62.5)
  Short-term borrowings (repayments), net                            3.3      (103.2)      58.9        10.0
  Dividends paid                                                   (49.5)      (49.0)     (65.7)      (65.5)
  Disbursements to reacquire stock                                 (21.1)      (31.9)     (22.8)      (47.2)  
  Other                                                              4.7          .7        6.2         1.0
  
  Net cash flow provided from (used for) financing
    activities                                                     (38.3)     (223.4)      50.4      (141.7)

Net increase (decrease) in cash and cash equivalents                 2.4       (10.6)       5.3        (4.4)

Cash and cash equivalents, beginning of period                       6.8        14.5        3.9         8.3

Cash and cash equivalents, end of period                         $   9.2     $   3.9    $   9.2     $   3.9


<F1>
The accompanying notes are an integral part of this statement.
</TABLE>



<TABLE>
NICOR Inc.                                                                                           Page 4 

Consolidated Balance Sheet (Unaudited)
(Millions)
<CAPTION>
                                                             September 30     December 31     September 30
                          Assets                                 1996             1995            1995    

Current assets
  <S>                                                          <C>   <C>       <C>   <C>        <C>   <C>
  Cash and cash equivalents                                    $     9.2       $     6.8        $     3.9
  Short-term investments, at cost which
    approximates market                                              7.3            19.6             14.8
  Receivables, less allowances of $6.8,
    $5.8 and $5.1, respectively                                    142.1           261.7             94.4
  Gas in storage, at last-in, first-out cost                       135.0            63.0             58.9
  Deferred gas costs                                                42.4             8.7             17.2
  Other                                                             28.4            30.0             45.3

                                                                   364.4           389.8            234.5
Property, plant and equipment, at cost
  Gas distribution                                               2,946.3         2,886.2          2,840.0
  Shipping                                                         234.2           223.8            224.2
  Other                                                              1.0              .4               .4
                                                                 3,181.5         3,110.4          3,064.6
  Less accumulated depreciation                                  1,410.8         1,331.1          1,300.7

                                                                 1,770.7         1,779.3          1,763.9

Other assets                                                        92.2            90.0             80.8

                                                               $ 2,227.3       $ 2,259.1        $ 2,079.2         
     
               Liabilities and Capitalization

Current liabilities
  Long-term obligations due within one year                    $    25.2       $    50.0        $    50.0
  Short-term borrowings                                            202.1           198.8            143.2
  Accounts payable                                                 235.9           308.4            257.6
  Gas refunds due customers                                            -            24.2             42.5
  Other                                                             31.3            44.3             28.9

                                                                   494.5           625.7            522.2
Deferred credits and other liabilities                       
  Deferred income taxes                                            192.0           210.0            207.2
  Regulatory income tax liability                                   84.5            86.5             87.6
  Unamortized investment tax credits                                49.2            50.8             51.2
  Other                                                            157.5           120.9            114.8

                                                                   483.2           468.2            460.8

Capitalization
  Long-term debt                                                   518.4           468.7            419.1
  Preferred stock                                               
    Redeemable                                                       8.6             8.8              8.7
    Nonredeemable                                                     .1              .1               .1
  Common equity                                                   
    Common stock                                                   124.5           125.8            125.8
    Paid-in capital                                                 34.6            49.6             49.9
    Retained earnings                                              563.4           512.2            492.6

                                                                 1,249.6         1,165.2          1,096.2  
    
                                                               $ 2,227.3       $ 2,259.1        $ 2,079.2
  

<F1>
The accompanying notes are an integral part of this statement.             
</TABLE>



NICOR Inc.                                                           Page 5 

Notes To The Consolidated Financial Statements (Unaudited)

ACCOUNTING POLICIES

Depreciation for the gas distribution segment is calculated using a
straight-line method for the calendar year.  For interim periods,
depreciation is allocated based on gas deliveries.  In April 1996, the gas
distribution plant composite depreciation rate increased to 4.1 percent from
3.7 percent.

CASH FLOW INFORMATION

Income taxes paid, net of refunds, and interest paid, net of amounts
capitalized, for the periods ended September 30 were (millions): 

                                     Nine months        Twelve months 
                                    1996      1995      1996      1995
   
   Income taxes paid               $55.8     $44.1     $64.6     $56.1

   Interest paid                    39.7      38.0      43.3      42.5


REGULATORY MATTERS

On April 3, 1996, the Ill.C.C. granted Northern Illinois Gas a $33.7 million
general rate increase, of which $12 million relates to the change in the
company's composite depreciation rate noted above.  The order, effective
April 11, 1996, allows the company a rate of return on original-cost rate
base of 9.67 percent, which reflects an 11.13 percent cost of common equity. 
The new rate structure will allow Northern Illinois Gas to recover a larger
proportion of its fixed costs during warmer months.  The overall result is
that the company's earnings will be less sensitive to the effects of weather
and the seasonal variations in quarterly earnings will be reduced.

In May 1996, the Ill.C.C. denied requests for rehearing filed by several
parties including Northern Illinois Gas.  The company and other parties have
subsequently appealed certain aspects of the Ill.C.C.'s order to the Third
District Appellate Court of Illinois.

On August 15, 1996, Northern Illinois Gas filed a performance-based rate
plan with the Ill.C.C. for gas supply costs.  The filing was in response to
a recent amendment to the Illinois Public Utilities Act which allows
utilities to propose programs consisting of alternatives to traditional cost
of service regulation.  Currently, natural gas supply costs are recovered
from customers without mark-up.  Under the proposed program, Northern
Illinois Gas would compare its total annual gas supply costs against a
market-based benchmark, and any difference would be shared between Northern
Illinois Gas and its customers.  The Ill.C.C. has up to 11 months to hold
hearings and act on the request.

LONG-TERM DEBT
                                              
On August 6, Northern Illinois Gas sold $75 million of 6.45% First Mortgage
Bonds due in 2001.  The net proceeds from the sale of the bonds replenished
corporate funds which were used for the March 1996 maturity of $50 million
of 4-1/2% First Mortgage Bonds and for general corporate purposes.




NICOR Inc.                                                           Page 6 

Notes To The Consolidated Financial Statements (Unaudited)
(Continued)

DISCONTINUED OPERATIONS

In the second quarter of 1996, the company made a positive adjustment of $15
million after-tax to its reserve for discontinued operations.  Factors
contributing to the adjustment include the settlement of certain
contingencies at terms more favorable than originally anticipated and
revisions in management's estimate of the remaining discontinued costs
related to contract drilling, oil and gas, inland barging and extractive
operations.  The balance of the reserve will continue to be evaluated as the
remaining environmental, legal, tax and other contingencies are resolved.

CONTINGENCIES

The company is involved in legal or administrative proceedings before
various courts and agencies with respect to rates, taxes and other matters.

Current environmental laws require treatment of certain waste materials on
sites owned by NICOR that may have been generated by two barge-cleaning
facilities previously owned and operated by certain discontinued businesses
of the company.  NICOR remediated one site in accordance with the approved
closure plan and began the three-year post-closure monitoring period in
1995.  The cost of evaluation and cleanup of the other site is currently
estimated to range from $5 million to $15 million.  The company is
evaluating whether any of these costs will be recoverable from insurance or
other sources.

Until the early 1950s, manufactured gas facilities were operated in the
Northern Illinois Gas service territory.  Manufactured gas is now known to
have created various by-products that may still be present at these sites. 
Current environmental laws may require cleanup of these former manufactured
gas plant sites.  The company has identified up to 40 properties in its
service territory believed to be the location of such sites.  Of these 40
properties, Northern Illinois Gas currently owns 15 and formerly owned or
leased 13.  The remaining properties were never owned or leased by the
company.  Information has been presented to the Illinois Environmental
Protection Agency regarding preliminary reviews of the company's currently
owned and formerly owned or leased properties.  More detailed investigations
are either currently in progress or planned at many of these sites.  At
certain sites, the current owners are seeking to allocate cleanup costs to
former owners or lessees, including Northern Illinois Gas.

The results of continued testing and analysis should determine to what
extent remediation is necessary and may provide a basis for estimating any
additional future costs which, based on industry experience, could be
significant.  Costs are currently being recovered pursuant to Ill.C.C.
authorization.

On December 20, 1995, Northern Illinois Gas filed suit in the Circuit Court
of Cook County against certain insurance carriers.  This suit seeks to
declare the insurance carriers liable under policies in effect primarily
between the years 1954 and 1985 for costs incurred or to be incurred for
environmental cleanup of former manufactured gas plant sites.  Presently, 






NICOR Inc.                                                           Page 7 

Notes To The Consolidated Financial Statements (Unaudited)
(Concluded)

CONTINGENCIES (Concluded)

management cannot predict the timing or outcome of this lawsuit.  Any
recoveries from such litigation or other sources will be flowed back to the
company's customers.

Although unable to determine the outcome of these contingencies, management
believes that appropriate accruals have been recorded.  Final disposition of
these matters is not expected to have a material impact on the company's
financial condition or results of operations.





NICOR Inc.                                                           Page 8 

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

OVERVIEW

The following discussion should be read in conjunction with the Management's
Discussion and Analysis section of the NICOR Inc. 1995 Annual Report on
Form 10-K.

Income from continuing operations for the three-, nine- and twelve-month
periods ended September 30, 1996, rose $9 million to $15.1 million,
$21.9 million to $86 million and $23 million to $121.8 million,
respectively, from the corresponding 1995 periods.  Earnings per common
share from continuing operations were $.30, $1.71 and $2.42 compared with
$.12, $1.26 and $1.93, respectively.  The increase in each period was due 
primarily to higher operating results in the gas distribution segment.

In the second quarter of 1996, NICOR made a positive adjustment of $15
million to its reserve for discontinued operations.  Including this
adjustment, NICOR's 1996 net income for the nine- and twelve-month periods
ended September 30, 1996, was $101 million and $136.8 million, respectively. 
Earnings per common share were $2.01 and $2.72, respectively.  For further
information on this adjustment, see Discontinued Operations on page 6.

Operating income (loss) for the periods ended September 30 by business
segment was (millions):

                        Three months      Nine months    Twelve months
                        1996     1995    1996    1995    1996     1995 

   Gas distribution    $ 31.9   $ 14.3  $155.3  $113.5  $212.5   $166.8
   Shipping               4.5      4.5    17.0    15.2    25.1     22.3
   Other                 (1.1)    (1.0)   (2.9)   (2.7)   (4.3)    (3.7)

                       $ 35.3   $ 17.8  $169.4  $126.0  $233.3   $185.4


The following summarizes operating income comparisons by business segment:

-       Gas distribution operating income for the three-, nine- and twelve-
        month periods increased $17.6 million, $41.8 million and
        $45.7 million, respectively.  For the three-month period, the
        increase was due to the impact of the April 1996 rate case
        which included a 2.8 percent general rate increase and rate design 
        changes which shift certain revenues and earnings from cold-weather 
        months to warm-weather months.  For the nine- and twelve-month 
        periods, the increase was a result of the rate case and an increase in
        deliveries of natural gas, partially offset by higher depreciation. 
        The positive impact of the rate case and higher deliveries on
        the twelve-month period was also partially offset by higher
        operating and maintenance expenses.

-       Shipping operating income for the three-month period was unchanged
        from a year ago as increased operating revenues relating to an
        increase in volumes shipped were offset by higher operating
        expenses.  For the nine- and twelve-month periods, shipping 






NICOR Inc.                                                           Page 9 

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

OVERVIEW (Concluded)

        operating income increased $1.8 million and $2.8 million,
        respectively, as higher revenues, attributable to an increase in
        volumes shipped, more than offset higher operating expenses. 
        Factors contributing to the increase in volumes shipped in each
        period include improved economic conditions and market growth in the
        Eastern Caribbean and the Virgin Islands, as well as expansion to
        new destinations.

RESULTS OF OPERATIONS

Details of various financial and operating information by segment can be
found in the tables on pages 12 and 13.  The following summarizes the major
changes in NICOR's revenues and expenses.

Operating revenues increased $63.3 million, $244 million and $314.8 million
for the three-, nine- and twelve-month periods, respectively, from the
corresponding 1995 periods due primarily to higher revenues in the gas
distribution segment.  For the three-month period, the increase in the gas
distribution segment was due to higher natural gas supply costs, which are
recovered from customers, and the impact of the rate case.  For the
nine- and twelve-month periods, the increase in the gas distribution segment
was due to an increase in deliveries, higher gas costs and the impact of the
rate case.  Higher deliveries were attributable to the positive impact
of colder weather, demand growth among existing customers and customer
additions.

Gas distribution margin, defined as operating revenues less cost of gas and
revenue taxes, is shown in the following table for the periods ended
September 30.  The improvement in each period's margin was due in large part
to the positive effect of the rate case.  The impact of higher
deliveries also contributed to the increase in margin for the nine- and
twelve-month periods.  Margin per Mcf delivered for each period rose
primarily as a result of the rate case.

                             Three months     Nine months    Twelve months
                             1996    1995    1996    1995    1996     1995 
  Gas distribution   
    margin (Millions)       $ 84.1  $ 64.4  $359.8  $306.2  $495.9  $429.6

  Margin per Mcf
    delivered                 1.35    1.00     .93     .86     .89     .86

Operating and maintenance expense increased $12.5 million, $29.3 million and
$41 million for the three-, nine- and twelve-month periods, respectively,
due principally to higher costs in the shipping segment caused primarily by
increased volume-related shore and vessel costs.  The twelve-month period
was also impacted by higher administrative and general costs and a higher
bad debt provision in the gas distribution segment.







NICOR Inc.                                                           Page 10

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

RESULTS OF OPERATIONS (Concluded)

Depreciation expense increased in each period due to the change in
the gas distribution plant composite depreciation rate and gas plant
additions.  For further information on the change in the plant composite
depreciation rate, see Accounting Policies on page 5.

Other income decreased in each period due to the combined effect of higher
interest on income tax adjustments and the impact of lower investment levels
on interest income.

Interest on debt increased in each period due primarily to higher borrowing
levels.

The effective income tax rate rose to 36 percent from 34.3 percent for the
three-month period.  The third quarter 1995 effective tax rate was unusually
low due mainly to adjustments related to prior interim periods.  For the
twelve-month period, the effective income tax rate rose to 35.8 percent from
33.9 percent due in large part to a higher state tax provision and less 
excess deferred taxes turning around.

FINANCIAL CONDITION

Net cash flow from continuing operations decreased $200.6 million and
$222.7 million for the nine- and twelve-month periods, respectively, due to
increased gas in storage, the timing of gas cost recoveries, a 1995 gas
pipeline refund and a return to normal levels of customer advance payments 
in the gas distribution segment.  These factors were partially offset by a 
favorable $35 million income tax settlement in the second quarter of 1996.  
Net cash flow from operations may fluctuate widely from one interim period to 
another due to the seasonal nature of NICOR's businesses. 
The company generally relies on short-term financing to meet temporary
working capital needs.

NICOR and its gas distribution subsidiary maintain short-term credit
agreements with major domestic and foreign banks.  At September 30, 1996,
these agreements, which serve as backup for the issuance of commercial
paper, totaled $278 million, and the company had $202.1 million of
commercial paper outstanding.  At September 30, 1996, the unused lines of
credit under these credit agreements were $75.9 million.

On August 6, 1996, Northern Illinois Gas sold $75 million of 6.45% First
Mortgage Bonds due in 2001.  The net proceeds from the sale of the bonds
replenished corporate funds which were used for the March 1996 maturity of
$50 million of 4-1/2% First Mortgage Bonds and for general corporate
purposes.

In March 1996, the company completed the $50 million common stock buyback
program initiated in October 1994.  During the first quarter of 1996, NICOR
purchased and retired approximately 160,000 common shares at an aggregate
cost of $4.4 million.






NICOR Inc.                                                           Page 11

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

FINANCIAL CONDITION (Concluded)

In June 1996, NICOR announced another stock repurchase program having an
aggregate market value of up to $50 million.  The purchases are being made
as market conditions permit through open market transactions.  At the end of
the third quarter, NICOR had purchased and retired 357,000 common shares at
an aggregate cost of $11.1 million.

Effective with the dividend paid on May 1, 1996, NICOR's quarterly dividend
on common stock was increased 3.1 percent to 33 cents per share.  This
payment represents an annual rate of $1.32 per share, a four-cent increase
over the $1.28 per share established with the May 1, 1995 dividend.

REGULATORY MATTERS

On April 3, 1996, the Ill.C.C. granted Northern Illinois Gas a $33.7
million, 2.8 percent general rate increase effective April 11, 1996.  On
August 15, 1996, the company filed a performance-based rate plan with the
Ill.C.C. for gas supply costs.  For further information relating to these
items, see Regulatory Matters on page 5.





<TABLE>
NICOR Inc.                                                                                           Page 12

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

OPERATING STATISTICS

Gas Distribution

Changes in weather can materially affect operating results.  Operating revenues, deliveries, weather statistics
and other data are presented below.
<CAPTION>

                                           Three months ended    Nine months ended     Twelve months ended
                                              September 30          September 30           September 30   
                                            1996      1995        1996       1995        1996       1995   
Operating revenues (Millions):            
  Sales
    <S>                                   <C>       <C> <C>     <C>        <C>         <C>        <C>
    Residential                           $  104.7  $   72.0    $  703.9   $  571.5    $  982.2   $  803.6
    Commercial                                23.9      15.6       187.2      148.2       256.9      210.4
    Industrial                                 3.4       1.6        33.9       24.6        45.1       34.6
                                             132.0      89.2       925.0      744.3     1,284.2    1,048.6  
  Transportation
    Commercial                                 7.8       6.2        38.7       34.0        55.0       45.8  
    Industrial                                10.7      12.8        40.4       45.3        57.6       58.7
                                              18.5      19.0        79.1       79.3       112.6      104.5

  Revenue taxes and other                     10.5       9.3        94.2       72.2       118.4       94.0

                                          $  161.0  $  117.5    $1,098.3   $  895.8    $1,515.2   $1,247.1


Deliveries (Bcf):
  Sales                                                                                
    Residential                               15.5      15.4       166.3      148.5       249.3      210.6
    Commercial                                 3.7       3.6        44.8       38.9        65.2       55.7
    Industrial                                  .6        .4         8.9        6.9        12.4        9.8
                                              19.8      19.4       220.0      194.3       326.9      276.1
  Transportation
    Commercial                                 6.3       6.4        51.4       40.8        74.6       56.9
    Industrial                                36.1      38.6       114.9      121.8       158.7      165.4
                                              42.4      45.0       166.3      162.6       233.3      222.3 

                                              62.2      64.4       386.3      356.9       560.2      498.4


Gas cost per Mcf sold                     $   3.27  $   2.12    $   2.94   $   2.61    $   2.75   $   2.58


Weather statistics:
  Degree days                                   84         93      4,088      3,785       6,414      5,562
  Percent colder (warmer) than normal           (5)        2           4         (4)          5         (9)


Customers at end of period (Thousands):
  Sales
    Residential                            1,670.3   1,641.1       
    Commercial                               139.1     139.1
    Industrial                                11.4      11.4
                                           1,820.8   1,791.6

  Transportation                         
    Commercial                                17.9      16.4
    Industrial                                 2.7       2.4
                                              20.6      18.8

                                           1,841.4   1,810.4 

</TABLE>






<TABLE>
NICOR Inc.                                                                                           Page 13

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

OPERATING STATISTICS (Concluded)

Shipping
<CAPTION>
                                              Three months ended    Nine months ended     Twelve months ended
                                                 September 30          September 30           September 30   
                                               1996       1995       1996       1995        1996       1995  

<S>                                          <C> <C>    <C> <C>    <C>        <C>         <C>        <C>
Operating revenues (Millions)                $   50.4   $   38.5   $  141.4   $  115.5    $  189.5   $  158.9
    
Operating income (Millions)                  $    4.5   $    4.5   $   17.0   $   15.2    $   25.1   $   22.3

TEUs shipped (Thousands)
  Southbound                                     25.6       18.4       70.5       54.2        92.5       75.6
  Northbound                                      4.0        4.0       10.8       11.7        14.8       15.7   
  Interisland                                     2.0        1.0        5.2        2.9         7.3        4.0

                                                 31.6       23.4       86.5       68.8       114.6       95.3  

Revenue per TEU                              $  1,517   $  1,566   $  1,553   $  1,593    $  1,575   $  1,585

Ports served                                       28         23

Vessels owned                                      14         14                   
     
  

 
</TABLE>





NICOR Inc.                                                           Page 14

PART II - Other Information

Item 1.  Legal Proceedings

         For information concerning legal proceedings, see Regulatory
         Matters and Contingencies in Notes to the Consolidated Financial
         Statements beginning on page 5, which are incorporated herein by
         reference.

Item 6.  Exhibits and Reports on Form 8-K

  (a)    See Exhibit Index on page 16 filed herewith.

  (b)    The company did not file a report on Form 8-K during the third
         quarter of 1996.





NICOR Inc.                                                           Page 15

Signature

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.







                                        NICOR Inc.



Date   November 13, 1996                 By       DAVID L. CYRANOSKI       
                                                  David L. Cyranoski
                                                Senior Vice President,
                                               Secretary and Controller




NICOR Inc.                                                           Page 16

Exhibit Index

Exhibit
 Number                        Description of Document                      

 10.01   NICOR Stock Deferral Plan.

 10.02   NICOR 1995 Directors Stock Plan.

 27.01   Financial Data Schedule.