Nicor Inc.
                                                                 Form 10-K
                                                                 Exhibit 10.25



                      1998 LONG-TERM INCENTIVE PROGRAM


At the March 1998 meeting of the Compensation Committee, the Committee approved 
the 1998 Long-Term Incentive Program, participants and awards.  Shown below is 
a full description of the Long-Term Program for 1998.

Summary of 1998 Long-Term Incentive Program

  Combination of Stock Options (SOs) and Dividend Performance Units (DPUs).

  -  Annual grants of both, generally on a one-for-one basis.

  -  Nothing prevents the Committee from granting either freestanding stock 
     options or dividend performance units.

  SOs have a ten-year term and would vest after three years.

  DPUs would accumulate dividend equivalents over at least a three-year period, 
  and would pay out based on total shareholder return over the period.

  SOs and DPUs would be freestanding.

  The company will also continue to make selected use of restricted stock.

Description of Stock Options

  Option exercise price set at fair market value on date of grant.

  Options vest after three years (100% in year three).

  Options expire ten years from date of grant.

  Options can be NQSOs or ISOs; Nicor plans to grant NQSOs in 1998.

Description of Dividend Performance Units

  Each dividend performance unit accumulates all of the dividends paid on one 
  share of Nicor stock during the three-year period.  As an example, if Nicor's 
  annual dividend grows at $0.08 per year from its current level of $1.48, each 
  unit would be worth $4.62 at the end of three years:


This Document Constitutes Part of a Prospectus Covering Securities That
Have Been Registered under the Securities Act of 1933.

                               
                               
                               
                               
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                      Annual Dividend            Cumulative
      Year                As of May         Dividend Unit Value
      1997                         $1.40                    -
      1998                         $1.48                   $1.46
      1999                         $1.56                   $3.00 
      2000                         $1.64                   $4.62

  Accrued dividend equivalents are not reinvested in company stock, nor is any 
  interest paid on accrued dividends.

  Dividend performance units accumulate no additional value after the end of
  the three-year period.

  Dividend performance units will pay out in cash, except that a participant in
  the Stock Deferral Plan may elect to defer up to 50% of their payout into
  that plan.  Deferral elections must meet the guidelines and timing of the 
  Stock Deferral Plan to be effective.

How Dividend Performance Unit Payouts are Determined

  All dividend performance units pay out at the end of at least three years.

  The payout is modified by a performance multiplier which ranges from 0 to 1.5.

  The multiplier is based on Nicor total shareholder return (TSR) over the 
  performance period, as compared to the performance of a utility industry peer
  group (S&P utility group).  

  The following schedule shows the proposed dividend performance unit multiplier
  schedule:
                          Dividend Performance Unit
                             Multiplier Schedule     

            Nicor TSR Performance     
            Percentile Relative        Dividend Performance Unit
            To S&P Utility Group            Payout Multiple       
         
         75th Percentile or Higher           1.5   X
              60th Percentile                1.0   X
              50th Percentile                0.75  X
              40th Percentile                0.5   X
              25th Percentile                0.25  X
         Below 25th Percentile               0     X
                               
                               
                               
                               
                               
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  If Nicor total shareholder return for the performance period is negative, the 
  dividend performance unit payout multiple will be zero.

Transferability

With Compensation Committee approval, stock options and dividend performance 
units may be transferred, for no consideration, to or for the benefit of the 
participant's immediate family as defined in the plan.  All terms and 
conditions remain applicable after transfer.

Termination Provisions

In the case of death, disability or retirement:

  Non-vested options and dividend performance units held for more than one year 
  (as of the date of death, disability or retirement) will vest and/or pay out 
  in full.

  The full number of dividend performance units will pay out at the end of the 
  performance cycle, based on the normal per-unit performance/pay out 
  guidelines.

  Vested options will remain exercisable for ten years after the date of grant.

  The Compensation Committee can override these provisions at its discretion.

In the case of termination of employment for any other reason, there will be no 
accelerated vesting of unvested options and dividend performance units.  Vested 
options will remain exercisable for three months after the date of termination.
The Compensation Committee can override these provisions at its discretion.




                                             
                                                        Nicor Human Resources
                                                               March 1998