SECURITIES AND EXCHANGE COMMISSION
                   Washington, D.C.  20549
                              
                          FORM 10-Q


  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  0-10007


                    COLONIAL GAS COMPANY
   (Exact name of registrant as specified in its charter)

             Massachusetts                      04-1558100
       (State or other jurisdiction of       (I.R.S. Employer
       Incorporation or organization)     Identification Number)

       40 Market Street, Lowell, Massachusetts       01852
      (Address of principal executive offices)     (Zip Code)


Registrant's telephone number, including area code:  
(508)  322-3000


Former name, former address and former fiscal year, if
changed since last report:  Not applicable

  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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                 Yes X      No


  The number of shares of the registrant's common stock, $3.33
par value, outstanding as of November 1, 1996 was 8,478,313.


                    COLONIAL GAS COMPANY

                            INDEX


                                                  

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

  Consolidated Condensed Statements of Income -
      Three Months Ended September 30, 1996 and 1995 
      Nine Months Ended September 30, 1996 and 1995  
      Twelve Months Ended September 30, 1996 and 1995  

  Consolidated Condensed Balance Sheets -
      September 30, 1996, December 31, 1995 and
      September 30, 1995                          

  Consolidated Condensed Statements of Cash Flows -
      Nine Months Ended September 30, 1996 and 1995  
      Twelve Months Ended September 30, 1996 and 1995  

  Notes to Consolidated Condensed Financial Statements 

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


PART II - OTHER INFORMATION

Item 5.  Other Information                                      

Item 6.  Exhibits and Reports on Form 8-K                            


              PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

            COLONIAL GAS COMPANY AND SUBSIDIARIES
         CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                         (UNAUDITED)
                                       Three Months Ended
                                         September 30,
                                         1996      1995
                                      (In Thousands Except
                                       Per Share Amounts)

Operating Revenues                      $15,245   $14,911
  Cost of gas sold                        8,474     7,875
      Operating Margin                    6,771     7,036

Operating Expenses:
  Operations                              7,156     7,271
  Maintenance                               968       995
  Depreciation and Amortization           2,765     2,579
  Taxes, other than income                1,237     1,172
      Total Operating Expenses           12,126    12,017

Income Taxes                             (2,789)   (2,730)

Utility Operating Loss                   (2,566)   (2,251)

Other Operating Income:
  Truck transportation revenues           2,902     2,878
  Truck transportation expenses, 
      including income taxes and 
         interest                        (2,050)   (2,355)
      Truck transportation net income       852       523
  Other, net of income taxes                 76        45
Total Other Operating Income                928       568
Non-Operating Income, Net                   219       124

Loss Before Interest and Debt Expense    (1,419)   (1,559)

Interest and Debt Expense                 2,161     2,373

Net Loss                              $  (3,580) $ (3,932)

Average Common Shares Outstanding         8,448     8,312

Loss per Average Common Share         $   (0.42) $  (0.47)

Dividends Paid per Common Share       $    .325  $   .320

     (See accompanying notes to consolidated condensed 
                    financial statements)


            COLONIAL GAS COMPANY AND SUBSIDIARIES
         CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                         (UNAUDITED)

                                       Nine Months Ended
                                         September 30,
                                        1996       1995
                                      (In Thousands Except
                                       Per Share Amounts)

Operating Revenues                     $117,060   $108,024
  Cost of gas sold                       60,368     55,955
      Operating Margin                   56,692     52,069

Operating Expenses:
  Operations                             23,563     22,971
  Maintenance                             3,234      3,232
  Depreciation and Amortization           8,424      7,624
  Taxes, other than income                4,077      3,924
      Total Operating Expenses           39,298     37,751

Income Taxes                              4,435      3,027

Utility Operating Income                 12,959     11,291

Other Operating Income:
  Truck transportation revenues           9,148      5,526
  Truck transportation expenses, 
     including income taxes and 
       interest                          (7,006)    (5,060)
      Truck transportation net income     2,142        466
  Other, net of income taxes                175        (14)

Total Other Operating Income              2,317        452

Non-Operating Income, Net                   570        415

Income Before Interest and Debt Expense  15,846     12,158

Interest and Debt Expense                 6,402      6,924

Net Income                               $9,444    $ 5,234

Average Common Shares Outstanding         8,413      8,277

Income per Average Common Share          $ 1.12     $ 0.63

Dividends Paid per Common Share          $0.970     $0.955



 (See accompanying notes to consolidated condensed
                 financial statements)

            COLONIAL GAS COMPANY AND SUBSIDIARIES
         CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                         (UNAUDITED)

                                       Twelve Months Ended
                                          September 30,
                                        1996       1995
                                      (In Thousands Except
                                       Per Share Amounts)

Operating Revenues                     $173,685   $156,100
  Cost of gas sold                       88,045     80,078
      Operating Margin                   85,640     76,022

Operating Expenses:
  Operations                             31,901     29,959
  Maintenance                             4,403      4,516
  Depreciation and Amortization          11,025      9,977
  Taxes, other than income                5,303      5,034
  Restructuring charge                        0      3,185
      Total Operating Expenses           52,632     52,671

Income Taxes                              9,767      5,318

Utility Operating Income                 23,241     18,033

Other Operating Income:
  Truck transportation revenues          11,197      6,839
  Truck transportation expenses, 
      including income taxes and 
         interest                        (8,918)    (6,368)
      Truck transportation net income     2,279        471
  Other, net of income taxes                181        (83)

Total Other Operating Income              2,460        388

Non-Operating Income, Net                 1,021        721

Income Before Interest and Debt Expense  26,722     19,142

Interest and Debt Expense                 8,749      9,126

Net Income                              $17,973    $10,016

Average Common Shares Outstanding         8,395      8,256

Income per Average Common Share          $ 2.14     $ 1.21

Dividends Paid per Common Share          $ 1.29     $ 1.27



     (See accompanying notes to consolidated condensed 
                    financial statements)

            COLONIAL GAS COMPANY AND SUBSIDIARIES
            CONSOLIDATED CONDENSED BALANCE SHEETS
                           ASSETS

                            September 30,  December 31,  September 30,
                               1996          1995          1995
                             (Unaudited)                 (Unaudited)
                                         (In Thousands)

Utility Property:
At original cost               $327,102     $308,191      $304,113
  Accumulated depreciation      (81,273)     (72,636)      (73,237)
      Net utility property      245,829      235,555       230,876

Non-Utility Property - Net        6,001        5,036         4,527

      Net property              251,830      240,591       235,403

Capital Leases - Net              1,795        2,253         2,948

Current Assets:
  Cash and cash equivalents       9,061        7,541         7,248
  Accounts receivable - net       4,827       16,864         6,455
  Accrued utility revenues          701        8,924           533
  Unbilled gas costs             13,201        9,688         4,093
  Fuel and other inventories     14,492       13,648        15,372
  Prepayments and other current 
     assets                      10,323         4,337         6,071

      Total current assets       52,605        61,002        39,772

Deferred Charges and Other 
   Assets:
  Unrecovered deferred income 
   taxes                          9,980       10,562        10,889
  Unrecovered environmental 
   expenses - incurred            3,779        4,761         4,324
  Unrecovered environmental 
   expenses - accrued             1,793        2,300         3,222
  Unrecovered transition 
   costs - accrued                3,600        3,600         4,700
  Other                          16,625       17,352        13,195
      Total deferred charges
          and other assets       35,777       38,575        36,330

Total Assets                   $342,007     $342,421      $314,453

     (See accompanying notes to consolidated condensed 
                  financial statements)


            COLONIAL GAS COMPANY AND SUBSIDIARIES
            CONSOLIDATED CONDENSED BALANCE SHEETS
               LIABILITIES AND CAPITALIZATION

                            September 30,  December 31,  September 30,
                               1996          1995           1995
                           (Unaudited)                  (Unaudited)
                                        (In Thousands)
Capitalization:
  Common equity:
   Common Stock - par value 
      $3.33 per share 
      Authorized - 15,000 
      shares Issued and 
      outstanding - 8,472,
      8,412 and 8,334 shares  $28,212      $27,863       $27,754
   Premium on common stock     53,363       51,447        50,899
   Retained earnings           27,043       25,760        19,898
      Total Common equity     108,619      105,070        98,551
  Long-term debt               85,305       75,418        70,138

      Total capitalization    193,923      180,488       168,689

Capital Lease Obligations         967        1,359         2,237

Current Liabilities:
  Current maturities of 
    long-term debt              5,149        6,141         7,818
  Current capital lease 
     obligations                  828          894           712
  Notes payable                52,000       61,835        51,800
  Gas inventory purchase 
     obligations               10,899       12,340        11,867
  Accounts payable              8,605       12,150         5,963
  Other                         9,713        8,306         3,837

      Total current 
         liabilities           87,194      101,666        81,997

Deferred Credits and Reserves:
  Deferred income taxes-funded 34,771       32,299        31,910
  Deferred income taxes-
     unfunded                   9,980       10,562        10,889
  Accrued environmental 
     expenses                   1,793        2,300         3,222
  Accrued transition costs      3,600        3,600         4,700
  Other                         9,779       10,147        10,809

      Total deferred credits 
         and reserves          59,923       58,908        61,530

Total Capitalization and 
   Liabilities               $342,007    $ 342,421     $ 314,453



 (See accompanying notes to consolidated condensed 
                 financial statements)

            COLONIAL GAS COMPANY AND SUBSIDIARIES
       CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                         (UNAUDITED)


                                             Nine Months Ended
                                               September 30,
                                              1996      1995
                                              (In Thousands)

Cash Flows From Operating Activities:
  Net income                                $ 9,444  $  5,234
  Adjustments to reconcile net income to 
     net cash                                18,198    11,281
  Changes in current assets and liabilities   6,118    13,764

      Net cash provided by operating 
         activities                          33,760    30,279

Cash Flows From Investing Activities:
  Capital expenditures                      (20,187)  (18,408)
  Change in deferred accounts                (3,499)      318

      Net cash used in investing activities (23,686)  (18,090)

Cash Flows From Financing Activities:
  Dividends paid on Common Stock             (8,160)   (7,903)
  Issuance of Common Stock                    2,265     2,044
  Issuance of long-term debt                 20,000       -
  Retirement of long-term debt              (11,105)   (8,415)
  Debt issue cost                              (278)      -
  Change in notes payable                    (9,835)    2,300
  Change in gas inventory purchase 
     obligations                             (1,441)   (1,993)
      Net cash used in financing activities  (8,554)  (13,967)

Net (decrease) increase in cash and 
   cash equivalents                           1,520   (1,778)
Cash and cash equivalents at beginning 
   of period                                  7,541     9,026

Cash and cash equivalents at end 
   of period                               $  9,061   $ 7,248

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:
      Interest - net of amount 
         capitalized                       $  6,989   $ 6,368

      Income and franchise taxes           $  6,780   $ 3,428

 (See accompanying notes to consolidated condensed 
                  financial statements)

            COLONIAL GAS COMPANY AND SUBSIDIARIES
       CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                         (UNAUDITED)


                                           Twelve Months Ended
                                               September 30,
                                             1996       1995
                                              (In Thousands)

Cash Flows From Operating Activities:
  Net income                                $17,973   $10,016
  Adjustments to reconcile net income 
     to net cash                             21,492    13,931
  Changes in current assets and 
     liabilities                             (4,798)    1,185

      Net cash provided by operating 
         activities                          34,667    25,132

Cash Flows From Investing Activities:
  Capital expenditures                      (27,850)  (28,667)
  Change in deferred accounts                (5,611)    4,156

      Net cash used in investing 
         activities                         (33,461)  (24,511)

Cash Flows From Financing Activities:
  Dividends paid on Common Stock            (10,829)  (10,482)
  Issuance of Common Stock                    2,923     3,003
  Issuance of long-term debt                 40,000       -
  Retirement of long-term debt              (27,502)   (8,446)
  Debt issue costs                           (3,217)      -
  Change in notes payable                       200    16,300
  Change in gas inventory purchase 
     obligations                               (968)   (1,780)
      Net cash (used in) provided by 
         financing activities                   607    (1,405)

Net (decrease) increase in cash and 
   cash equivalents                           1,813      (784)
Cash and cash equivalents at beginning 
   of period                                  7,248     8,032

Cash and cash equivalents at end of 
   period                                  $  9,061  $  7,248

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:
      Interest - net of amount 
         capitalized                      $  10,489  $  9,268

      Income and franchise taxes          $   6,827  $  4,762

       (See accompanying notes to consolidated condensed 
                    financial statements)

            COLONIAL GAS COMPANY AND SUBSIDIARIES
    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                         (UNAUDITED)


1.  In the opinion of the Company, the accompanying unaudited
    consolidated condensed financial statements contain all
    adjustments (consisting of only normal recurring
    accruals) necessary to present fairly the financial
    position as of September 30, 1996 and 1995 and results of
    operations for the three, nine and twelve month periods
    ended September 30, 1996 and 1995 and cash flows for the
    nine and twelve month periods ended September 30, 1996
    and 1995.

2.  Due to the significant impact of gas used for space
    heating during the heating season (November-April) and
    the Company's seasonal rate structure, the results of
    operations for the three month and nine month periods
    ending September 30, 1996 and 1995 are not necessarily
    indicative of the results to be expected for the full
    year.

3.  During the nine months ended September 30, 1996, the
    Company issued 105,020 shares of Common Stock, $3.33 par
    value, under a Dividend Reinvestment and Common Stock
    Purchase Plan and under Employee Savings Plans. As a
    result, Common Stock, $3.33 par value, increased $349,000
    and Premium on Common Stock increased $1,916,000.

    On September 18, 1996, the Company issued $10 million of
    18 month First Mortgage Bonds bonds with an interest rate 
    of 6.20% under its Medium Term Note program.

4.  Contingencies

    Reference is made to Note J/Contingencies of the Notes to
    Consolidated Financial Statements contained within the
    Company's 1995 Annual Report to Stockholders.

5.  Reclassifications are made periodically to previously
    issued financial statements to conform to the current
    year presentation.


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

Results of Operations

       Three Months Ended September 30, 1996 and 1995

     The Company's net loss for the three months ended
September 30, 1996 was $3,580,000, or $.42 per share, which
is 8.9% or $352,000 less than the $3,932,000 loss, or $.47
per share, reported for the same period last year.  The
principal reasons for the change in net income are the
increase in Transgas operating income as described below.
The Company typically incurs losses for the second and third
quarters while reporting profits for the first and fourth
quarters.  This is due to significantly higher natural gas
sales throughout the colder months to meet customers'
heating needs. Approximately 90% of the Company's
residential customers are heating accounts.
 
      Other operating income included a $329,000 increase in
operating income for Transgas, principally due to gains on
the sale of used tractors.
 
      Nine Months Ended September 30, 1996 and 1995
 
      Net income for the nine months ended September 30, 1996
was $9,444,000, compared to $5,234,000 for the comparable
1995 period. This $4,210,000 or 80% increase is due to
factors described below.
 
      The Company's operating margin increased 8.9% or
$4,623,000 during the period due to a 7.8% increase in firm
gas sales as a result of weather which was 3.6% colder than
the comparable period in the prior year and 2.5% colder than
normal and continued customer growth.
 
      Total operating expenses increased by 4.1% or $1,547,000
principally due to two factors.  First, a $594,000 or 2.3%
increase in operations and maintenance expenses principally
due to increased bad debt expense as a result of higher gas
revenues; and second, an $800,000 or 11% increase in
depreciation and amortization expense due to an increase in
utility property.
 
      Income taxes increased $1,408,000 or 47% due to a higher
level of income subject to tax.
 
      Other operating income increased $1,865,000, or 413% due
primarily to the improved financial results for Transgas
compared to the 1995 period.  An 86% increase in Transgas'
LNG hauls over the first nine months led to a $3,622,000
increase in revenue and resulted in a $1,676,000 increase in
truck transportation net income.  The increased LNG hauls
were primarily due to the colder than normal weather during
the winter months.
 
       Twelve Months Ended September 30, 1996 and 1995

  Net  income  for  the twelve month period ended  September
30,  1996 rose to $17,973,000, or $2.14 per share,  up  79%
from  $10,016,000  or  $1.21 per share  over  twelve  month
period ended September 30, 1995.  Net income for the  prior
twelve  month  period was after a restructuring  charge  of
$3,185,000  which  was  recorded in  December  1994.   This
charge  resulted from a voluntary early retirement  program
and  the closing of retail appliance sales operations.  Net
income  for  the  twelve month period ended  September  30,
1995,  excluding the restructuring charge, was  $11,981,000
or $1.45 per share.

     The Company's operating margin increased 13% or $9,618,000
during the current twelve month period due to a 13% increase
in firm gas sales resulting from weather that was 8.4%
colder than the comparable prior year period (4.9% colder
than normal), and continued customer growth.
 
     Total operating expenses decreased by $39,000.  Operations
and maintenance expenses increased $1,829,000, or 5.4%,
principally due to higher bad debt expense, based on
increased revenues.  Depreciation and amortization increased
$1,048,000, or 11% due to an increase in utility property.
These increases were offset by the $3,185,000 restructuring
charge recorded in December 1994, as described above.
 
     Income taxes increased $4,449,000 or 84% due to a higher
level of income subject to tax.
 
     Other operating income increased $2,072,000 primarily due
to a $1,808,000 increase in net income for Transgas.  The
colder winter of 1995-1996 favorably affected Transgas'
performance as compared to the twelve-month period ended
September 30, 1995.
                              
     Interest and debt expense decreased $377,000 or 4.1% due
to decreased interest expense on long term debt, increased
regulatory interest income as a result of increased unbilled
gas costs; both partially offset by an increase in interest
on higher short term debt balances.
 
Liquidity and Capital Resources
 
      On September 18, 1996, the Company issued $10 Million of
18 month First Mortgage Bonds with an interest rate of 6.20%
under its Medium Term Note program.
 
 
 
 PART II - OTHER INFORMATION

Item 5.  Other Information

    None


Item 6.  Exhibits and Reports on Form 8-K

a.  List of Exhibits

    None

b.  Reports on Form 8-K

    None

                         SIGNATURES




     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.
  
                                  COLONIAL GAS COMPANY
                                  (Registrant)


Date:  November 13, 1996        F.L. Putnam III
                                President and Chief Executive Officer


Date:  November 13, 1996        Nickolas Stavropoulos
                                Executive Vice President - Finance,
                                Marketing and Chief Financial Officer


          [END OF FORM 10-Q FOR PERIOD ENDING SEPTEMBER 30, 1996]