MDU RESOURCES GROUP, INC.

              1992 KEY EMPLOYEE STOCK OPTION PLAN

                            (KESOP)

I.   Purpose

The purpose of the MDU Resources Group, Inc. 1992 Key Employee
Stock Option Plan (the "Plan") is to motivate key employees of
MDU Resources Group, Inc. and its business units to achieve
specified long-term performance goals of MDU Resources Group,
Inc. or its business units and to encourage ownership by them of
the Common Stock of MDU Resources Group, Inc.  The Plan
accomplishes these objectives through the grant of performance
accelerated Stock Options and the opportunity to earn dividend
equivalents.

II.  Definitions

The following definitions shall be used for purposes of
administering the Plan:

     "Agreement" means a written agreement evidencing each award
     of Options, which shall contain such terms and be in such
     form as the Compensation Committee may determine.

     "Board" means the Board of Directors of the Company.

     "Cause" means the (1) continued failure by a Participant to
     perform his/her duties (except as a direct result of the
     Participant's Disability) after receiving notification by
     the Chief Executive Officer of the Company or an individual
     designated by the Chief Executive Officer (or the Board of
     Directors of the Company in the case of the Chief Executive
     Officer) identifying the manner in which the Participant has
     failed to perform his/her duties, (2) engaging in conduct,
     which, in the opinion of a majority of the Board of
     Directors of the Company or a business unit, is materially
     injurious to the Company, or (3) conviction of any felony.

     "Change of Control" means the earliest of the following to
     occur:  (a) the public announcement by the Company or by any
     person (which shall not include the Company, any subsidiary
     of the Company, or any employee benefit plan of the Company
     or of any subsidiary of the Company) ("Person") that such
     Person, who or which, together with all Affiliates and
     Associates (within the meanings ascribed to such terms in
     the Rule 12b-2 of the General Rules and Regulations under
     the Exchange Act) of such Person, shall be the beneficial
     owner of twenty percent (20%) or more of the voting stock of
     the Company outstanding; (b) the commencement of, or after
     the first public announcement of any Person to commence, a
     tender or exchange offer the consummation of which would
     result in any Person becoming the beneficial owner of voting
     stock aggregating thirty percent (30%) or more of the then
     outstanding voting stock of the Company; (c) the
     announcement of any transaction relating to the Company
     required to be described pursuant to the requirements of
     Item 6(e) of Schedule 14A of Regulation 14A under the
     Exchange Act; (d) a proposed change in constituency of the
     Board such that, during any period of two (2) consecutive
     years, individuals who at the beginning of such period
     constitute the Board cease for any reason to constitute at
     least a majority thereof, unless the election or nomination
     for election by the stockholders of the Company of each new
     Director was approved by a vote of at least two-thirds (2/3)
     of the Directors then still in office who were members of
     the Board at the beginning of the period; or (e) any other
     event which shall be deemed by a majority of the
     Compensation Committee to constitute a "change in control."

     "Common Stock" means the Common Stock, $1.00 par value, of
     the Company.

     "Company" shall refer to MDU Resources Group, Inc.

     "Companies" shall refer to MDU Resources Group, Inc. and its
     business units.

     "Compensation Committee" or "Committee" shall be the
     Compensation Committee of the Board of Directors of the
     Company or any Committee of the Board performing similar
     functions as appointed from time to time by the Board.

     "Covered Employee" means any Participant who would be
     considered a "Covered Employee" for purposes of
     Section 162(m) of the Internal Revenue Code of 1986, as
     amended.

     "Disability" means the inability of a Participant to perform
     each and every duty pertaining to the Participant's regular
     occupation by reason of any medically determinable physical
     or mental impairment which can be expected to result in
     death or which has lasted or can be expected to last for a
     continuous period of not less than twelve months.

     "Dividend Account" is defined in Section IV.D 6.

     "Effective Date" means the date as of which the Plan is
     approved by the stockholders of MDU Resources Group, Inc.

     "Eligible Employee" means any key employee of any of the
     Companies who, in the opinion of the Compensation Committee,
     has significant responsibility for the continued growth,
     development and financial success of the Company or any
     business unit thereof.

     "Exchange" means the New York Stock Exchange.

     "Exchange Act" means the Securities Exchange Act of 1934, as
     amended.

     "Fair Market Value" means the average of the high and low
     prices for shares of Common Stock traded on the Exchange on
     the date of the grant of such Option or if no shares are
     traded on that day, on the next preceding day on which
     Common Stock was traded on the Exchange.

     "Goals" means the performance goals established by the
     Committee, which shall be based on one or more of the
     following measures:  sales or revenues, earnings per share,
     shareholder return and/or value, funds from operations,
     operating income, gross income, net income, cash flow,
     return on equity, return on capital, earnings before
     interest, operating ratios, stock price, customer
     satisfaction, accomplishment of mergers, acquisitions,
     dispositions or similar extraordinary business transactions,
     profit returns and margins, financial return ratios and/or
     market performance.  Performance goals may be measured
     solely on a corporate, subsidiary or business unit basis, or
     a combination thereof.  Performance goals may reflect
     absolute entity performance or a relative comparison of
     entity performance to the performance of a peer group of
     entities or other external measure.

     "Option" or "Stock Option" means an option to purchase
     Common Stock granted pursuant to the Plan.  Options may not
     be "incentive stock options" as that term is defined in
     Section 422 of the Internal Revenue Code of 1986, as
     amended.

     "Participants" means those Eligible Employees selected by
     the Committee for participation in the Plan and includes
     their beneficiaries as applicable.

     "Performance Cycle" means a time frame established by the
     Committee pursuant to Section IV.D 4 for the measurement of
     Goals.

     "Plan" means this MDU Resources Group, Inc. 1992 Key
     Employee Stock Option Plan, adopted by the Board on February
     13, 1992, and approved by the stockholders on April 28,
     1992, and as amended from time to time.

     "Termination of Service" means leaving the employ of the
     Companies for any reason.  Transfer between Companies is not
     a Termination of Service.

     "Trustee" means a trustee chosen by the Committee or any
     successor trustee selected by the Committee.

III. Administration

Subject to and not inconsistent with the express provisions of
the Plan the Committee has the sole and complete discretion to
administer and interpret the Plan, including, but not limited to:

     (a)  designating the Participants to whom Options are
     granted under the Plan;

     (b)  authorizing the Trustee to grant Options, determining
     the time(s) when Options are granted and fixing the number
     of shares of Common Stock underlying each Option granted
     hereunder;

     (c)  determining the terms and conditions of an Option
     granted (including, but not limited to, the exercise price,
     any restriction or limitation, the vesting provisions,
     acceleration of vesting or forfeiture waiver applicable to
     any Option) and the terms of the related Agreement;

     (d)  determining the conditions of the awarding of Dividend
     Equivalents;

     (e)  establishing Goals and fixing and adjusting the Goals;

     (f)  interpreting the terms and provisions of the Plan;

     (g)  adopting, amending, and rescinding rules and
     regulations relating to the Plan; and

     (h)  making all determinations necessary or advisable for
     the administration of the Plan.

All decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the
Companies, the Trustee, and the Plan's Participants.

The Committee may also revise or adjust the vesting provisions
(except that the Committee may not extend vesting beyond nine
years), Goals and their levels applicable to a Performance Cycle,
at any time to take into account, among other things, new
Participants, promotions, transfers, terminations, changes in law
and accounting and tax rules and to make such adjustments as the
Committee deems necessary or appropriate to reflect the
Companies' performances or the impact of extraordinary or unusual
items, events, or circumstances or in order to avoid windfalls or
hardships.

The Company and/or the Committee may consult with legal counsel,
who may be counsel for the Company or other counsel, with respect
to its obligations and duties hereunder or with respect to any
claim, action, or proceeding or any other matter.

No member or agent of the Committee shall be personally liable
for any action, determination, or interpretation made in good
faith with respect to the Plan or grants made hereunder, and all
members and agents of the Committee shall be fully protected by
the Company in respect of any such action, determination, or
interpretation.

The Committee's determination under the Plan, including without
limitation, determinations as to the Participants to receive
grants, the terms and provisions of such grants and the
Agreement(s) evidencing the same, need not be uniform and may be
made by it selectively among the Eligible Employees who receive
or are eligible to receive grants under the Plan, whether or not
such Eligible Employees are similarly situated.

IV.  General Plan Description

     A.   Overview
     The Plan provides for each Participant to (a) receive
     grant(s) of Stock Options, (b) have the opportunity to earn
     dividend equivalents, and (c) have the opportunity to
     achieve accelerated vesting of Stock Options and receive
     additional grants of Stock Options based upon the
     achievement of Goals established by the Committee over a
     designated Performance Cycle.

     B.   Eligibility
     On or after the Effective Date, subject to the provisions of
     the Plan, the Committee shall, from time to time, select
     from eligible employees Participants to whom options are to
     be granted.  At the time of selection, the Committee shall
     specify the terms and conditions of the Participant's grant
     of Options.

     C.   Authorization
     The total number of shares of Common Stock as to which
     Options may be granted may not exceed 800,000 shares; if any
     unexercised options lapse or terminate for any reason, the
     shares underlying the Options may be made subject to Options
     granted to other Participants.  In the event of the
     declaration of a Common Stock dividend and/or Common Stock
     split, reclassification or analogous change in the
     capitalization or any distributions (other than regular cash
     dividends) to holders of record of Common Stock, an
     appropriate adjustment shall be made to the total number of
     shares as to which Options may be granted under the Plan to
     any Participant, to the number of shares subject to Options,
     and to the exercise price.

     Shares of Common Stock delivered under this Plan may be
     authorized but unissued shares of Common Stock, treasury
     stock, shares of Common Stock purchased on the open market
     and held by the Trustee, or shares of Common Stock from the
     1983 Key Employees' Stock Option Plan.

     D.   Individual Limitations
     Subject to adjustment as provided in Section IV(C), the
     total number of shares of Common Stock with respect to which
     Options may be granted in any calendar year to any Covered
     Employee shall not exceed 150,000 shares, and the aggregate
     number of dividend equivalents that a Covered Employee may
     receive in any calendar year shall not exceed $1,500,000.

     E.   Stock Options and Dividend Equivalents

     (1)  Grants
     Each Participant shall receive a grant of Options on the
     date she or he becomes a Participant.  The Committee shall
     determine the size of the grant to each Participant.
     Participants may receive subsequent grants of Options when
     and as directed by the Committee.

     (2)  Exercise Price and Term
     The exercise price for an Option granted under the Plan is
     the Fair Market Value of the Company's Common Stock on the
     date of the Option grant.  An Option granted shall generally
     have a term of ten years commencing from the date of grant,
     subject to the provisions of Sections V and VI and to the
     general discretion of the Committee set forth in Section III.

     (3)  Vesting and Accelerated Vesting Provisions
     No Option may be exercised before it has vested.  Generally
     Option grants have a vesting period (before accelerated
     vesting) of nine years subject to the provisions of Section
     VI and to the general discretion of the Committee set forth
     in Section III.  The vesting period for all or a portion of
     Options granted to a Participant may be accelerated by the
     Committee subject to the achievement of Goals for a
     Performance Cycle.

     (4)  Performance Cycle and Goals
     The Committee shall fix the starting and ending dates of
     each Performance Cycle.  The minimum term shall be six
     months; the maximum term shall be nine years.  A Performance
     Cycle will be the time period used in assessing the
     performance of each of the Companies in comparison to the
     separate Goals established by the Committee for each of the
     Companies.  Performance Cycles and Goals may vary for each
     of the Companies.

     (5)  Subsequent Grants; Accelerated Vesting
     Additional grants of Options may be made to Participants at
     any time.  In particular, but not by way of limitation,
     additional grants of Options may be made to Participants at
     the beginning of a new Performance Cycle based upon the
     appropriate Companies' achievement of Goals and the results
     of accelerated vesting of all or a portion of previous
     grants.  The Committee will have the authority to determine
     the size and terms of any new Option grant for each
     Participant.

     (6)  Dividend Equivalents
     At the beginning of each Performance Cycle, a Dividend
     Account (the "Dividend Account") shall be established for
     each Participant.  If a dividend is declared by the Board on
     the Common Stock of the Company an equivalent amount shall
     be accrued in the Dividend Account of each Participant for
     each share of Common Stock underlying all unvested Options
     held by the Participant.  At the end of each Performance
     Cycle the Committee in its sole discretion may award an
     amount between 0 percent and 150 percent of a Participant's
     Dividend Account based on whether the Goals established for
     that Performance Cycle were achieved.  Any earned portion of
     a Participant's Dividend Account is paid in cash to that
     Participant at the end of each Performance Cycle at a date
     and time determined by the Committee.  Any portion of a
     Participant's Dividend Account not awarded to the
     Participant by the Committee is forfeited.  However, shares
     of Common Stock underlying unvested Options retain a
     dividend equivalent and a Participant can earn the value of
     these dividend equivalents in subsequent Performance Cycles.

     (7)  Exercise of Options
     As provided in paragraph (3) of this section, generally all
     Options granted to a Participant under the Plan shall vest
     on the ninth anniversary of the date of grant; provided,
     however, that if and to the extent the vesting of an Option
     is accelerated at the end of a Performance Cycle, the Option
     may thereafter be exercised to the extent that the Option
     has vested. Any vested Option may be exercised from time to
     time in part or as a whole, at the discretion of the
     Participant, from the date of vesting until termination of
     the Option; no Option shall be exercisable after its
     expiration date; subject in either case to the provisions
     set forth in Section V and to the general discretion of the
     Committee set forth in Section III.

     Options may be exercised by giving written notice of
     exercise as directed by the Company specifying the number of
     shares to be purchased.  The notice shall be accompanied by
     provision for payment of the exercise price.  Payment may be
     made in part or in full in cash or by tendering shares of
     Common Stock already owned by the Participant, based upon
     the Fair Market Value of the Common Stock on the date the
     Option is exercised, or through share withholding.
     Participants may also simultaneously exercise Options and
     sell the shares of Common Stock thereby acquired and use the
     proceeds from the sale as payment for the purchase price of
     the shares.

     (8)  Nonassignability of Options
     Options granted may not be assigned, transferred, or pledged
     by the Participant other than by will or the laws of descent
     and distribution or pursuant to a domestic relations order.

V.   Termination of Service

     A.   Except as set forth below, upon any Termination of
     Service, unvested Options and any amounts accrued in a
     Participant's Dividend Account shall be forfeited unless the
     Committee decides otherwise pursuant to Section III. If a
     Participant terminates employment with the Company pursuant
     to Section 5.01 of the Company's Bylaws which provides for
     mandatory retirement for certain officers on their 65th
     birthday (or terminates employment with a subsidiary of the
     Company pursuant to a similar subsidiary Bylaw provision)
     and the Participant's 65th birthday occurs (i) during the
     first year of the then current Performance Cycle, all
     unvested Options and related Dividend Equivalents shall be
     forfeited; (ii) during the second year of the then current
     Performance Cycle, determination of whether the Goals have
     been met for the Performance Cycle will be made by the
     Committee at the end of the Performance Cycle, and to the
     extent met, the Options and related Dividend Equivalents
     will vest based on the percentile achieved, prorated based
     upon the number of full months elapsed from and including
     the month in which the current Performance Cycle began to
     and including the month in which the Participant's 65th
     birthday occurs; and (iii) during the third year of the then
     current Performance Cycle, determination of whether the
     Goals have been met for the Performance Cycle will be made
     by the Committee at the end of the Performance Cycle, and to
     the extent met, the Options and related Dividend Equivalents
     will vest based on the percentile achieved (without
     proration).  Options that are vested shall remain
     exercisable for the period specified in Section V.E. below.
     Options and related Dividend Equivalents that do not vest in
     accordance with the above provisions shall be forfeited.

     B.   Death
     If the Participant dies while still employed, then any
     vested Options, to the extent that they are then
     exercisable, may be fully exercised at any time within one
     (1) year (even if this extends the term of the Options)
     after the date of the Participant's death by the person
     designated in the Participant's last will and testament or
     by the personal representative of the Participant's estate.

     C.   Disability
     If the Participant suffers Disability, then any vested
     Options, to the extent that they are then exercisable, may
     be fully exercised at any time within one (1) year (even if
     this extends the terms of the Options) after the date of
     Disability by the Participant or by a person qualified or
     authorized to act on behalf of the Participant.

     D.   Cause
     If a Participant's Termination of Service is for Cause, the
     right to exercise any vested Option shall terminate with
     such termination of employment.  For this purpose, the
     determination of the Committee as to whether employment was
     terminated for Cause shall be final.

     E.  Other Termination of Service
     Except as set forth in the next sentence, in the event of
     the Participant's Termination of Service for reasons other
     than Death, Disability, or Cause, to the extent that any
     vested Options are then exercisable, the Participant shall
     be entitled to exercise the Options for the three (3) month
     period following such Termination of Service (even if this
     extends the term of the Options).

     In the event of the Participant's Termination of Service
     because of retirement at age 65 pursuant to Section 5.01 of
     the Company's Bylaws, the Participant shall be entitled to
     exercise Options that have vested or do vest in accordance
     with Section V.A. above for the three (3) month period
     following the later of (i) the date of vesting of the
     Options and (ii) the date of such Termination of Service
     (even if this extends the term of the Options).

VI.  Change of Control

Upon a Change of Control of the Company, all Options previously
granted under the Plan shall become immediately vested and
available for exercise.  The value of the amounts accrued in the
Participant's Dividend Account shall be paid in full at
100 percent of the amount thereof to the Participant in cash upon
the Change of Control.

VII. Miscellaneous Provisions

     A.   Unsecured General Creditor
     Participants and their beneficiaries, heirs,
     successors, and assigns shall have no legal or
     equitable rights, interests, or other claims in any
     property or assets of the Company, nor shall they be
     beneficiaries of, or have any rights, claims, or
     interests in any specified assets of the Company.  Any
     and all of the Company's assets shall be and remain
     general, unpledged, unrestricted assets of the Company.
     The Company's obligation under the Plan shall be that
     of an unfunded and unsecured promise of the Company to
     cause shares of Common Stock to be available or to pay
     benefits in the future.

     B.   No Contract of Employment
     Nothing contained in this Plan nor any related
     Agreement nor any action taken in the administration of
     the Plan shall be construed as a contract of employment
     or as giving a Participant any right to be retained in
     the service of the Company.

     C.   Withholding Taxes
     No later than the date on which a Participant receives
     Common Stock with respect to any Option exercised or
     cash with respect to Dividend Equivalents awarded under
     the Plan, the Participant shall pay in cash to the
     Company or its delegate or make arrangements
     satisfactory to the Company regarding the payment of
     any federal, state, or local taxes required by law to
     be withheld with respect to any such amounts.  The
     Participant may also make payment (i) by tendering
     shares of the Common Stock already owned by the
     Participant, based on the fair market value of the
     Common Stock on the date the tax is owed or (ii) by
     having such amounts withheld from the shares of the
     Common Stock otherwise distributable to him/her upon
     exercise of his/her Options.  The obligations of the
     Company under the Plan shall be conditioned on such
     payment or arrangements.  The Company or its delegate
     may deduct any taxes from any payment due to the
     Participant from the Company to the extent allowed by
     law.

     D.   Ten Percent Limitation
     No Option shall be granted under this Plan to a
     Participant if at the time the Option is granted the
     Participant shall own stock representing more than
     10 percent of the combined voting power of all classes
     of voting stock of the Company.

     E.   Severability
     In the event that any provision of the Plan or any
     related Agreement is held invalid, void or
     unenforceable, the same shall not affect, in any
     respect whatsoever, the validity of any other provision
     of the Plan or any related Agreement.

     F.   Inurement of Rights and Obligations
     The rights and obligations under the Plan shall inure
     to the benefit of, and shall be binding upon the
     Company, its successors and assigns, and the
     Participants and their beneficiaries consistent with
     the terms of the Plan.

     G.   Amendments
     The Board may at any time amend, suspend, or terminate
     the Plan including, without limitation, modifications
     to take into account and comply with any changes in
     applicable securities or federal income tax laws and
     regulations, or other applicable laws and regulations;
     provided, that no modification to the Plan shall
     increase the number of shares available under the Plan
     by more than 10 percent without approval of the holders
     of the Common Stock, except as otherwise permitted
     under Section IV.C; and provided further, that any such
     amendment, suspension, or termination must be
     prospective in that it may not deprive Participants of
     any Options or rights previously granted under the Plan
     whether vested or not, without consent of the
     Participant, except if required by statute or rules or
     regulations promulgated thereunder.

     H.   Restrictions
     Shares of Common Stock acquired by Participants
     pursuant to the exercise of Options granted under the
     Plan shall be subject to such restrictions on
     transferability and disposition as are required by
     federal and state security laws and such Participants
     shall not sell or transfer any shares acquired except
     in accordance with such laws.

     I.   Legal and Other Requirements
     The obligation of the Company to cause Common Stock to
     be available under the Plan shall be subject to all
     applicable laws, regulations, rules and approvals,
     including, but not limited to the receipt of any
     necessary approvals by state or federal regulatory
     bodies, and the effectiveness of a registration
     statement under the Securities Act of 1933 if deemed
     necessary or appropriate by the Company.  Certificates
     for shares of Common Stock issued hereunder may be
     legended as the Committee shall deem appropriate.

     J.   Agreements
     Each grant of Options shall be evidenced by an
     Agreement which shall contain such restrictions, terms
     and conditions as the Committee may require.
     Notwithstanding anything to the contrary contained in
     the Plan, the Company shall not be under any obligation
     to honor any grants under the Plan to any Participant
     hereunder unless such Participant shall execute all
     appropriate Agreements with respect to such Options in
     such form as the Committee may determine from time to
     time.

     K.   Applicable Law
     The Plan and any related Agreements shall be governed
     in accordance with the laws of the State of North
     Dakota.

VIII. Establishment of Trust

The Company may establish with the Trustee a trust consisting of
such sums of money or other property acceptable to the Trustee as
shall from time to time be paid or delivered to the Trustee, all
investments made therewith and proceeds thereof and all earnings
and profits thereon.  The Trustee shall invest funds, if any,
advanced by the Company in shares of Common Stock.  Upon the
exercise of an Option by a Participant, the Trustee shall take
Common Stock from the trust or shall purchase Common Stock on the
open market or from the Company and deliver certificates for such
shares to the Participant.

The Company shall have the right at any time to terminate the
trust but such termination shall not affect the rights of any
Participant to whom an Option has been granted under the Plan.
After effecting all purchases and transfers of Common Stock as
are required by the Plan pursuant to the exercise of Options by
Participants, the Trustee shall be relieved of all further
liability.  Termination of the trust shall take effect as of the
date the last such transfer is made.  Upon such termination any
assets remaining in the trust shall be returned to the Company
unless other directions are given to the Trustee by the Company.