Nicor Inc.
                                                                 Form 10-K
                                                                 Exhibit 10.23



                                     1998
                       NICOR INCENTIVE COMPENSATION PLAN

A.  The 1998 NICOR Incentive Compensation Plan is designed to
    link participant incentive compensation to the accomplishment
    of important objectives--both financial goals and defined
    strategic plans.  It ties the pay an individual receives to
    his performance and that of the company.  This plan is
    intended to provide a flexible framework for a performance
    bonus program for NICOR.

B.  Purpose

    The purpose of this Plan is to provide an annual incentive
    plan which supports the longer-term strategic planning
    process.  This is done by linking pay to the performance of
    tasks which focus on objectives of strategic importance.

C.  Eligible Group

    Officers of NICOR are eligible for participation. 
    Participation should be limited to those employees in
    positions which enable them to make significant contributions
    to the performance and growth of the company.

D.  Components of Plan
    
    Compensation Objective
    Bonus Targets
    Performance Targets
    Goal Setting Guidelines
    Program Schedule
    Form of Payment

    Compensation Objective

    Base Salary + Bonus Target = Short-Term Compensation
    Objective

    An individual's short-term compensation objective will be
    based on salary plus a bonus, expected to be earned if
    agreed-upon performance targets are met.  Under certain
    conditions, short-term compensation above or below targets
    may be paid.




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    Base salaries will be managed at the industry average which
    will be determined annually by survey data.  Bonus targets
    will be set based on the individual's grade level and
    compensation objective, such that total compensation
    objectives are managed at the level as determined by the
    Compensation Committee to remain competitive with industry.

    Bonus Target

    The bonus target amount varies according to pay, salary grade
    and ability to impact the organization.  The higher
    responsibility and impact levels, the greater the dollars at
    risk.

    Performance Targets

    Performance criteria focus on the achievement of agreed-upon
    and documented strategic goals.  Performance targets may
    include measures of financial performance, the ability to
    meet budget levels and individual or group performance
    objectives.  An individual's target may include all three
    types of goals, weighted by the grade level and
    responsibilities involved.  Each particular performance
    target will be assigned weighting reflected as a percentage
    of compensation objective.

    Goal Setting Guidelines

    The most important aspect of this Plan will be in
    establishing effective goals.  In addition to the goals which
    will be measured by company financial performance, realistic,
    operational management goals may be established and agreed
    upon by both the participant and his supervisor for company,
    division, project or individual performance.  As well as
    being realistic, the goals should be measurable wherever
    possible by quantifiable performance criteria.  It is
    recognized that measurement of some goals will require
    subjective assessments on criteria mutually agreed between an
    individual and his/her supervisor.  Goals must be consistent
    with the longer-term strategic plan.

    A set of guidelines will be devised by the NICOR Human
    Resources Department to aid in this process.  These
    guidelines will provide direction as to goal formulation and
    reporting.

    Amount of bonus payment for financial/budget related goals
    can vary above and below target based upon results achieved. 
    For targets met, bonus amount will be 100% of target.  When
    targets are exceeded or are not reached, bonus will be
    proportionately more or less than the target.




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    Project or individual goals which are not quantifiable will
    be evaluated by the participant's superior based on
    performance and will fall into one of five categories of
    achievement:  unsatisfactory; less than expected, but
    acceptable given facts and circumstances; expected; more than
    expected, but less than outstanding; and outstanding
    performance.  Accordingly, performance at, below or above
    expected performance will result in awards relative to
    performance. 

    The Compensation Committee may make appropriate upward or
    downward adjustments if, after taking into consideration all
    of the facts and circumstances of the performance period, it
    determines that adjustments are warranted.

    Plan Schedule

    The 1998 NICOR Incentive Compensation Plan runs on a calendar
    year basis, with the strategic planning cycle and budgeting
    process the primary link to performance and bonus targets. 
    Responsibility for determination of financial results will be
    with the Accounting Department.  A program for review will be
    established and individual, project, division or company goal
    performance will be reviewed at least twice each performance
    year.

    Year-end results should be available and evaluated in January
    of the following year.  Following approval of the
    Compensation Committee and Board at the January meeting,
    bonuses will be payable to participants.

    Form of Payment

    All awards will be paid in cash, except that a participant in
    the Stock Deferral Plan may elect to defer up to 50% of their
    award into that plan.  Deferral elections must meet the
    guidelines and timing of the Stock Deferral Plan to be
    effective.  Appropriate taxes for the entire award amount
    will be withheld from the portion of the award being paid in
    cash.

    A participant may elect by writing to the Compensation
    Committee prior to the end of the fiscal year to have all or
    a portion of the following year's incentive award deferred
    and paid in no more than five annual installments beginning
    either with the date of termination or retirement, or in a
    lump sum within six months after termination of employment or
    retirement.  In addition, with the consent of the
    Compensation Committee, the participant may, at the time of
    making such election, designate some other date for the
    commencement of such deferred payment.  Further, the
    participant may submit a request to change the original
    deferral period.  The request must be submitted in writing to
    the Compensation Committee who will take into consideration
    the particular facts and circumstances in its final
    determination.



    
    
                               -4-
    
    An amount which is deferred shall be credited with compounded
    interest equal to the prime rate applied on a quarterly
    basis.

E.  Integration with Existing Programs

    Base salaries will be managed with range standards at the
    industry average for comparable positions, with total
    compensation objectives to be managed at a level appropriate
    with the performance of the company within industry, as
    determined by the Compensation Committee.  Salaries will be
    monitored each year and increases granted based on merit and
    range standard.  Bonus targets will be set as a percentage of
    base salary.  A change, other than the annual salary review,
    in the compensation objective
    will customarily occur during the year only through promotion
    to various levels, at which time the base salary and bonus
    target are also likely to  change.

    Promotion of an employee during the year or reassignment to
    responsibilities in which new performance objectives apply
    will result in proration of the existing performance
    objectives and bonus target and assignment of new performance
    objectives as the Compensation Committee shall determine. 
    Promotion into the Plan would involve a promotional increase,
    but eligibility for bonus would be delayed unless the
    participant is able to produce positive results in the
    remaining time, as determined by the Compensation Committee.

    If a participant voluntarily terminates or is terminated for
    cause prior to the end of the performance period, then no
    award shall be granted.  In the event a participant shall
    die, become disabled, retire or is terminated without cause
    before the end of the performance period, then  the
    Compensation Committee will authorize payment of an award to
    the participant, or beneficiary, in such amount as the
    Committee deems appropriate.

F.  Responsibility

    Acceptance and success of this Plan will depend on
    documented, realistic goals that are fair, understandable and
    measurable.  Considerable management focus and involvement
    will be required for goals to be established, communicated
    and monitored.

    The Human Resources Department will be responsible for the
    administration of the system for the company.  This will
    include:

    1)  monitoring industry salary and total compensation levels,

    2)  recommending structural changes in base salary and
        compensation objective adjustments,
    
    
    
    
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    3)  reviewing eligibility and performance targets,

    4)  monitoring performance targets through the Accounting
        Department,

    5)  communicating progress report to participants, and,

    6)  progress and exception reporting to Compensation
        Committee.  

    The 1998 NICOR Incentive Compensation Plan and changes to its
    performance targets and measurement criteria will be reviewed
    and approved by the Compensation Committee.

    In establishing the actual bonus awards to be made, the
    Compensation Committee may take into account all of the facts
    and circumstances which exist during the year and may make
    appropriate upward or downward revisions in performance
    criteria, add or delete objectives, or change the relative
    percentages assigned to the various performance objectives.

G.  Amendment and Termination

    The Board of Directors may amend or terminate the Plan at any
    time without the consent of the participants.  No such
    amendment or termination shall negatively impact any
    participant's amount which accrued under the Plan prior to
    the calendar year in which the amendment is made.

    Summary

    The primary focus of this Plan is to link employee and
    company performance and performance bonus through an
    incentive plan.  It provides the necessary emphasis on
    accountability for actions and decisions and enables people
    to gain personally through significant efforts which
    contribute to the company's present and future success.






                                                NICOR Human Resources
                                                    February 1998