NICOR Inc.
                                                            Form 10-K/A
                                                            Exhibit 99.02






               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the NI-Gas Thrift
  Plan Committee:


We have audited the accompanying statements of net assets available for
benefits, with fund information, of the NI-Gas Thrift Plan as of
December 31, 1996 and 1995, and the related statements of changes in net
assets available for benefits, with fund information, for the years then
ended.  These financial statements are the responsibility of the Plan's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits, with fund
information, of the Plan as of December 31, 1996 and 1995 and the changes in
net assets available for benefits, with fund information, for the years then
ended in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The fund information in the
statements of net assets available for benefits, with fund information, and
the statements of changes in net assets available for benefits, with fund
information, is presented for additional analysis rather than to present the
net assets available for benefits and changes in net assets available for
benefits of each fund.  The fund information has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation
to the basic financial statements taken as a whole.


                                         ARTHUR ANDERSEN LLP
                                         Arthur Andersen LLP

Chicago, Illinois
June 26, 1997


                                - 1 -



<TABLE>
NI-Gas Thrift Plan
Statement of Net Assets Available for Benefits, with Fund Information
<CAPTION>

                                                                       December 31, 1996                                           
                                   NICOR      Stated    Common StockInternational     Balanced     Small
                                Stock Fund  Return Fund  Index Fund   Stock Fund        Fund     Stock Fund     Total   
Assets:

Investment in NI-Gas Savings
 <S>                           <C>           <C>        <C>            <C>        <C>            <C>       <C>
 Investment and Thrift Trust   $ 16,255,106$ 65,457,642 $  9,999,426$  3,288,793  $  4,642,166$  4,605,929 $104,249,062

Miscellaneous receivable             46,284     122,407            -           -             -      70,180      238,871
                                 16,301,390  65,580,049    9,999,426   3,288,793     4,642,166   4,676,109  104,487,933

Liabilities:

Miscellaneous payable                     -           -      133,844      13,269        44,275       1,311      192,699

Net Assets Available for Benefits$ 16,301,390$ 65,580,049$  9,865,582$  3,275,524 $  4,597,891$  4,674,798 $104,295,234




                                                                       December 31, 1995                                           
                                   NICOR      Stated    Common StockInternational     Balanced     Small
                                Stock Fund  Return Fund  Index Fund   Stock Fund        Fund     Stock Fund     Total   
Assets:

Investment in NI-Gas Savings
 Investment and Thrift Trust   $ 13,608,411$ 70,023,808 $  7,117,395$  2,936,537  $  3,147,933$  2,962,137 $ 99,796,221

Miscellaneous receivable             31,509      84,104      136,843      94,881        95,732      83,219      526,288
                                 13,639,920  70,107,912    7,254,238   3,031,418     3,243,665   3,045,356  100,322,509

Liabilities:

Miscellaneous payable               393,212     203,201            -           -             -           -      596,413

Net Assets Available for Benefits$ 13,246,708$ 69,904,711$  7,254,238$  3,031,418 $  3,243,665$  3,045,356 $ 99,726,096


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


                                      - 2 -






<TABLE>
NI-Gas Thrift Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
<CAPTION>

                                                                          December 31, 1996                       
                                     NICOR       Stated     Common Stock  International      Balanced        Small
                                  Stock Fund   Return Fund   Index Fund     Stock Fund         Fund        Stock Fund      Total   
Net increase in Plan assets from
 investment activities of the
 NI-Gas Savings Investment
 <S>                             <C>          <C>           <C>           <C>  <C>       <C>  <C>       <C>  <C>      <C>
 and Thrift Trust                $  4,306,830 $  4,655,772  $  1,783,920  $    193,204   $    544,253   $    589,925  $ 12,073,904

Contributions:
 Participants                         576,713    1,825,685       479,541       267,019        329,517        355,645     3,834,120
 Employer                             233,246      734,281       178,294        98,493        116,392        127,099     1,487,805

Distributions to participants      (1,335,867)  (8,755,831)     (776,158)     (300,054)      (449,412)      (303,998)  (11,921,320)

Transfers                            (726,240)  (2,784,569)      945,747       (14,556)       813,476        860,771      (905,371)

Net increase (decrease)             3,054,682   (4,324,662)    2,611,344       244,106      1,354,226      1,629,442     4,569,138

Net assets available for benefits
 at beginning of year              13,246,708   69,904,711     7,254,238     3,031,418      3,243,665      3,045,356    99,726,096

Net assets available for benefits
 at end of year                  $ 16,301,390 $ 65,580,049  $  9,865,582  $  3,275,524   $  4,597,891   $  4,674,798  $104,295,234



                                                                          December 31, 1995                        
                                     NICOR       Stated     Common Stock  International      Balanced        Small
                                  Stock Fund   Return Fund   Index Fund     Stock Fund         Fund        Stock Fund      Total   
Net increase in Plan assets from
 investment activities of the
 NI-Gas Savings Investment 
 and Thrift Trust                $  2,926,531 $  5,028,086  $  1,694,695  $    291,416   $    528,955   $    454,894  $ 10,924,577

Contributions:
 Participants                         589,815    2,300,688       306,405       291,783        230,169        197,999     3,916,859
 Employer                             235,412      905,893       116,594       105,979         82,140         72,787     1,518,805

Distributions to participants        (960,910)  (5,005,043)     (417,126)      (94,783)      (155,073)       (46,522)   (6,679,457)

Transfers                            (533,162)  (2,503,952)    1,126,422      (305,098)       840,642      1,161,849      (213,299)

Net increase                        2,257,686      725,672     2,826,990       289,297      1,526,833      1,841,007     9,467,485

Net assets available for benefits
 at beginning of year              10,989,022   69,179,039     4,427,248     2,742,121      1,716,832      1,204,349    90,258,611

Net assets available for benefits
 at end of year                  $ 13,246,708 $ 69,904,711  $  7,254,238  $  3,031,418   $  3,243,665   $  3,045,356  $ 99,726,096

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

                                      - 3 -







                            NI-GAS THRIFT PLAN
                     NOTES TO THE FINANCIAL STATEMENTS


PLAN INFORMATION

The following description of the NI-Gas Thrift Plan (the Plan) provides only
general information.  Participants should refer to the Plan agreement for
more detailed information.

The Plan.  The Plan is a defined contribution plan which was established on
January 1, 1978 to provide supplemental retirement security to substantially
all employees of Northern Illinois Gas Company (Northern Illinois Gas)
represented by a collective bargaining agreement.  The funds of the Plan are
commingled with the funds of the NI-Gas Savings Investment Plan and held for
safekeeping and investment by the NI-Gas Savings Investment and Thrift Trust
(the Trust).  The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).

Plan Administration.  Authority to control and manage the operation and
administration of the Plan is vested in a committee appointed by the Board
of Directors of Northern Illinois Gas.  Under the terms of a trust
agreement, LaSalle National Trust, N.A. acts as trustee for the Trust and
holds the investments of the Plan.  Administrative expenses associated with
operation of the Plan are paid from the Plan assets.

Contributions.  The participant may elect to make either tax-deferred or
after-tax contributions, or any combination thereof, by payroll deduction,
that are partially matched by Northern Illinois Gas.

Vesting and Forfeitures.  The participant's contributions and earnings
thereon are fully vested.  Northern Illinois Gas' contributions and earnings
thereon are vested after the participant's completion of five years of
service, the participant's death while employed by Northern Illinois Gas or
retirement.

If the participant's interest in Northern Illinois Gas' contributions and
earnings thereon is not vested, such interest will be forfeited if the
participant's employment with Northern Illinois Gas or an affiliate is
terminated and the participant is not reemployed within five years by
Northern Illinois Gas or an affiliate.  Any amounts forfeited by a
participant are applied to reduce the amount of Northern Illinois Gas'
contributions under the Plan.  Forfeitures for 1996 and 1995 totaled $7,039
and $3,770, respectively.

Suspensions and Withdrawals.  The participant may suspend contributions by
written notification filed with the Plan administration committee.  The
participant will not cease to be a participant during the suspension period.

The participant may elect, under certain conditions, to withdraw participant
contributions and earnings thereon prior to termination of employment. 
Northern Illinois Gas' matching contributions and earnings thereon will not
be distributed until the vested participant's employment has been
terminated.

Plan Termination.  Northern Illinois Gas expects to continue the Plan
indefinitely, but reserves the right to amend or discontinue it at any time
in a manner consistent with any collective bargaining agreement and subject
to the provisions of ERISA.  In the event of plan termination, participants
will become fully vested in their account balances.


                                   - 4 -






                            NI-GAS THRIFT PLAN
               NOTES TO THE FINANCIAL STATEMENTS (Continued)


ACCOUNTING POLICIES

Investment Balance.  The Plan states its investment in the Trust at the
underlying value of the investments of the Trust as follows:

Group annuity contracts are recorded at contract value.  Contract value
represents contributions made plus interest at the various contract rates,
less Plan withdrawals and administrative expenses.  The aggregate market
value of the group annuity contracts at December 31, 1996 and 1995, is
approximately $139.8 million and $151.6 million, respectively.  Estimated
market value is based on a variety of factors, such as contract terms,
interest rate, maturity date and credit worthiness of the issue.  For the
year ended December 31, 1996 and 1995, the average yield, which approximated
the crediting interest rate, was approximately 7.3 percent and 7.5 percent,
respectively.

The market value for NICOR Inc. Common Stock is based on the closing price
on the New York Stock Exchange.

The market value of the units of the Collective Investment Index Fund, which
is a commingled fund invested entirely in common stocks representative of
the Standard and Poor's 500 Stock Index (S&P 500), is determined by Harris
Investment Management Inc. based on the underlying value of the investments
in the fund.

The European, Australian and Far Eastern Index Fund (EAFE) is a commingled
investment fund comprised primarily of common stocks of non-North American
companies.  Units of the fund are valued monthly on a dollar basis.  The
underlying securities of the fund are valued on the basis of local
currencies.  The relationship between the dollar and foreign currencies
varies over time.  Translating the value of foreign securities from local
currency to the dollar can add to or detract from investment results based
on the currency relationship.

The DFA 6-10 Institutional Portfolio is a registered investment company fund
which invests primarily in a diverse group of common stocks of small
capitalization U.S. companies.  The market value of the shares of the
Portfolio is based on the underlying value of the investments of the
Portfolio.

The Equity Index Fund invests entirely in common stocks representative of
the S&P 500.  The Broad Market Fixed Income Index Fund invests in bonds
representative of a broad mix of U.S. Treasury, corporate and mortgage
securities having maturities generally between one and 30 years.  The
Russell 2500 Index Fund invests in common stocks representative of 2,500
domestic companies that are typically smaller than those found in the
S&P 500.  The market value of the units of these funds is determined by
Bankers Trust Company based on the underlying value of the investments in
the funds.

Allocation Provisions.  The Trust's net investment gain is allocated monthly
to the Plan based on the beginning ratio of the Plan's investment balance to
total Trust investments.

INCOME TAXES

The Internal Revenue Service has determined and informed Northern Illinois
Gas by a letter dated September 27, 1995, that the Plan is qualified and the
Trust established under the Plan is tax exempt under Section 401(a) of the
Internal Revenue Code (the Code).  The Plan's management believes that the
Plan and related Trust continue to be designed and operated in compliance
with the requirements of the Code.

                                   - 5 -






                            NI-GAS THRIFT PLAN
               NOTES TO THE FINANCIAL STATEMENTS (Continued)


NET TRANSFER TO NI-Gas SAVINGS INVESTMENT PLAN

If an employee transfers between the Plans, their account balance is
transferred into a new account in their current plan.  During 1996 and 1995,
a net transfer of $905,371 and $213,299, respectively, was made from the
NI-Gas Thrift Plan to the NI-Gas Savings Investment Plan.

TRUST FINANCIAL INFORMATION

The following schedules present the Trust's net assets as of December 31,
1996 and 1995, the increase in the Trust net assets derived from investment
activities for the years then ended and the Plan's share of each:

                            Net Assets in Trust

                                                      December 31         
                                                 1996            1995    
Assets

Group Annuity Contracts:
  New York Life Insurance Company            $ 21,197,024    $ 21,774,426
  Aetna Life Insurance Company                 18,219,879      23,353,589
  Continental Assurance Company                14,420,362      20,211,705
  Hartford Life Insurance Company              12,540,712      13,162,191
  Protective Life Insurance Company            11,201,971               -
  SunAmerica Life Insurance Company            11,180,228               -
  Allstate Life Insurance Company              10,423,620      10,650,033
  Principal Mutual Life Insurance Company       9,430,474      14,316,246
  Peoples Security Life Insurance Company       6,516,125               -
  Combined Insurance Company of America         6,354,623       6,604,745
  Great-West Life & Annuity Insurance
    Company                                     4,600,708      14,058,995
  John Hancock Mutual Life Insurance
    Company                                     3,877,426       6,028,578 
  Prudential Insurance Company
    of America                                  3,830,295       8,369,636
  Metropolitan Life Insurance Company           3,808,589       4,185,582

NICOR Inc., Common Stock*                      25,273,440      19,973,974

Index Funds:
  Collective Investment Index Fund             25,847,948      19,258,892
  DFA 6-10 Institutional Portfolio             11,177,015       7,187,805
  EAFE Index Fund                               9,663,784       8,492,943
  Equity Index Fund                             5,970,042       4,303,879
  Broad Market Fixed Income Index Fund          5,005,547       3,483,219
  Russell 2500 Index Fund                         615,596         412,768

Other assets                                    2,244,674       2,442,733

                                              223,400,082     208,271,939
Liabilities

Operating payables                                264,439         249,640

Net assets in Trust                          $223,135,643    $208,022,299

Plan's interest in Trust net assets          $104,249,062    $ 99,796,221

*  Denotes Party-in-Interest Investment.

                                   - 6 -






                            NI-GAS THRIFT PLAN
               NOTES TO THE FINANCIAL STATEMENTS (Concluded)


TRUST FINANCIAL INFORMATION (Concluded)
                                     
                        Trust Investment Activities

                                                Year Ended December 31   
                                                 1996             1995   
Investment income:
  Interest                                   $ 10,253,039    $ 10,648,174
  Dividends                                       952,860         913,174
  Net appreciation in market value
    of investments                              5,926,190       3,412,456
  Net investment gain from common/
    collective trusts                           6,792,574       7,085,347
  Net investment gain from a
    registered investment company               1,160,926       1,222,312

                                               25,085,589      23,281,463

Administrative expenses                          (283,470)       (302,255)

Increase in Trust net assets
  derived from investment activities         $ 24,802,119    $ 22,979,208

Net increase in Plan assets from
  investment activities                      $ 12,073,904    $ 10,924,577

RECONCILIATION TO FORM 5500

At December 31, 1996 and 1995, the Plan had $1,143,341 and $1,525,189,
respectively, of pending participant distributions.  Pending distributions
are recorded as a liability in the Plan's Form 5500; however, they are not
recognized as liabilities in the accompanying financial statements.  These
distributions are reflected in the statement of changes in net assets
available for benefits when actually paid.

                                  - 7 -