UNITED STATES
             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 March 31, 1998

                             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:  (978)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 April 30, 1998 was 8,732,120.


                    COLONIAL GAS COMPANY

                            INDEX


                                                  

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

  Consolidated Condensed Statements of Income -
      Three Months Ended March 31, 1998 and 1997     
      Twelve Months Ended March 31, 1998 and 1997    

  Consolidated Condensed Balance Sheets -
      March 31, 1998, December 31, 1997 and
      March 31, 1997                               

  Consolidated Condensed Statements of Cash Flows -
      Three Months Ended March 31, 1998 and 1997     
      Twelve Months Ended March 31, 1998 and 1997    

  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
                                           March 31,
                                         1998   1997
                                     (In Thousands Except
                                      Per Share Amounts)

Operating Revenues                      $77,822 $83,061
  Cost of gas sold                       40,917  43,717
      Operating Margin                   36,905  39,344

Operating Expenses:
  Operations                              6,650   7,437
  Maintenance                             1,067   1,146
  Depreciation and Amortization           3,184   2,973
  Taxes, other than income                1,254   1,382
      Total Operating Expenses           12,155  12,938

Income Taxes                              8,675   9,432

Utility Operating Income                 16,075  16,974

Other Operating Income:
  Energy Trucking revenues                  406   1,339
  Energy Trucking expenses, including income
      taxes and interest                    361   1,258
      Energy Trucking net income             45      81
  Other, net of income taxes                 51      49
Total Other Operating Income                 96     130

Non-Operating Income, Net                   176      94

Income Before Interest and Debt Expense  16,347  17,198
Interest and Debt Expense                 2,135   1,905

Net Income                              $14,212 $15,293

Average Common Shares Outstanding         8,703   8,543

Income per Average Common Share          $ 1.63  $ 1.79

Dividends Paid per Common Share          $ .335  $ .325


 (See accompanying notes to consolidated condensed financial
                         statements)

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

                                      Twelve Months Ended
                                          March 31,
                                        1998       1997
                                     (In Thousands Except
                                       Per Share Amounts)

Operating Revenues                     $181,901  $175,630
  Cost of gas sold                       99,655    92,909
      Operating Margin                   82,246    82,721

Operating Expenses:
  Operations                             29,257    28,940
  Maintenance                             4,425     4,505
  Depreciation and Amortization          12,260    11,307
  Taxes, other than income                5,132     5,357
      Total Operating Expenses           51,074    50,109

Income Taxes                              9,216     9,675

Utility Operating Income                 21,956    22,937

Other Operating Income:
  Energy Trucking revenues                4,596     8,794
  Energy Trucking expenses, including 
      income taxes and interest           4,305     7,602
      Energy Trucking net income            291     1,192
  Other, net of income taxes                317       203
Total Other Operating Income                608     1,395

Non-Operating Income, Net                   659       692

Income Before Interest and Debt Expense  23,223    25,024

Interest and Debt Expense                 8,264     8,481

Net Income                              $14,959   $16,543

Average Common Shares Outstanding         8,640     8,470

Income per Average Common Share          $ 1.73 $    1.95

Dividends Paid per Common Share          $ 1.34 $    1.30

 (See accompanying notes to consolidated condensed financial
                         statements)

            COLONIAL GAS COMPANY AND SUBSIDIARIES
            CONSOLIDATED CONDENSED BALANCE SHEETS
                           ASSETS


                               March 31,  December 31, March 31,
                                 1998        1997        1997
                              (Unaudited)             (Unaudited)
                                        (In Thousands)
 
Utility Property:
At original cost               $370,317    $362,742    $338,174
  Accumulated depreciation      (91,523)    (88,210)    (85,433)
      Net utility property      278,794     274,532     252,741

Non-Utility Property - Net        7,567       7,312       5,879

      Net property              286,361     281,844     258,620

Capital Leases - Net              2,614       2,630       2,487

Current Assets:
  Cash and cash equivalents       3,092         259       3,406
  Accounts receivable            29,991      21,788      32,102
      Allowance for doubtful 
      accounts                   (3,561)     (3,203)     (3,445)
  Accrued utility revenues        5,447       7,417       5,869
  Unbilled gas costs              8,118      19,266      12,296
  Fuel and other inventories     10,122      12,959       8,785
  Prepayments and other current 
     assets                       6,791       9,481       5,778

      Total current assets       60,000      67,967      64,791

Deferred Charges and Other Assets:
  Unrecovered deferred 
     income taxes                 8,820       9,014       9,580
  Unrecovered demand side 
     management costs             8,122       8,273       7,983
  Unrecovered environmental 
     expenses - incurred          4,135       3,833       4,130
  Unrecovered environmental 
     expenses - accrued             707         707       1,063
  Unrecovered transition 
     costs - accrued              2,800       2,800       4,500
  Other                          12,202      11,923      11,499
      Total deferred charges
          and other assets       36,786      36,550      38,755

Total Assets                   $385,761    $388,991    $364,653

 (See accompanying notes to consolidated condensed financial
                         statements)


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



                               March 31,  December 31, March 31,
                                 1998        1997        1997
                              (Unaudited)             (Unaudited)
                                        (In Thousands)
 Capitalization:
  Common equity:
   Common Stock - par value $3.33 per share
     Authorized - 15,000 shares
     Issued and outstanding - 
      8,728, 8,688 and 
      8,561 shares             $29,063     $28,931     $28,508
   Premium on common stock      58,262      57,277      54,985
   Retained earnings            47,219      35,924      43,838
      Total Common equity      134,544     122,132     127,331
  Long-term debt                90,059     100,102      85,226

      Total capitalization     224,603     222,234     212,557

Capital Lease Obligations        1,528       1,617       1,538
 
Current Liabilities:
  Current maturities of 
     long-term debt             20,167      10,164      15,155
  Current capital lease 
     obligations                 1,086       1,013         949
  Notes payable                 38,500      49,400      40,100
  Gas inventory purchase 
     obligations                 9,088      14,895       7,412
  Accounts payable              10,482      15,674       8,556
  Other                         17,268      11,362      17,733
      Total current liabilities 96,591     102,508      89,905

Deferred Credits and Reserves:
  Deferred income taxes-funded  42,626      41,443      37,023
  Deferred income taxes-unfunded 8,820       9,014       9,580
  Accrued environmental expenses   707         707       1,063
  Accrued transition costs       2,800       2,800       4,500
  Other                          8,086       8,668       8,487
      Total deferred credits 
         and reserves           63,039      62,632      60,653
Total Capitalization and
    Liabilities               $385,761    $388,991    $364,653



 (See accompanying notes to consolidated condensed financial
                         statements)


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


                                          Three Months Ended
                                              March 31,
                                           1998    1997
                                            (In Thousands)

Cash Flows From Operating Activities:
  Net income                               $14,212  $15,293
  Adjustments to reconcile net
     income to net cash                      3,719    2,498
  Changes in current assets and 
     liabilities                            12,392    6,173

      Net cash provided by operating 
         activities                         30,323   23,964

Cash Flows From Investing Activities:
  Utility capital expenditures              (7,489)  (4,836)
  Non-utility capital expenditures            (378)     (56)
  Change in deferred accounts                 (734)  (1,376)

      Net cash used in investing 
         activities                         (8,602)  (6,268)

Cash Flows From Financing Activities:
  Dividends paid on Common Stock            (2,917)  (2,774)
  Issuance of Common Stock                   1,117      907
  Issuance of long-term debt, net of 
     issuance costS                          9,658        0
  Retirement of long-term debt, including 
     premiums                              (10,040)     (37)
  Change in notes payable                  (10,900) (10,300)
  Change in gas inventory purchase
     obligations                            (5,807)  (5,627)
      Net cash used in financing 
        activities                         (18,889) (17,831)

Net increase (decrease) in cash and 
   cash equivalents                          2,832     (135)
Cash and cash equivalents at beginning of 
   period                                      259    3,541

Cash and cash equivalents at end of period  $3,092   $3,406

Supplemental Disclosures of Cash Flow 
     Information:
  Cash paid during the period for:
      Interest - net of amount capitalized  $3,414   $2,812

      Income and franchise taxes            $  278   $  529


 (See accompanying notes to consolidated condensed financial
                         statements)

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


                                         Twelve Months Ended
                                              March 31,
                                           1998       1997
                                            (In Thousands)

Cash Flows From Operating Activities:
  Net income                               $14,959  $16,543
  Adjustments to reconcile net income 
     to net cash                            19,528   20,218
  Changes in current assets and liabilities  4,346  (12,430)

      Net cash provided by operating 
        activities                          38,833   24,331

Cash Flows From Investing Activities:
  Capital expenditures                     (38,441) (27,415)
  Non-utility Capital expenditures          (2,210)    (973)
  Change in deferred accounts                 (200)  (2,924)

      Net cash used in investing 
         activities                        (40,851) (31,312)

Cash Flows From Financing Activities:
  Dividends paid on Common Stock           (11,578) (11,013)
  Issuance of Common Stock                   3,832    3,503
  Issuance of long-term debt, net of 
     issuance costs                         24,528   19,867
  Retirement of long-term debt, including 
     premiums                              (15,155) (11,286)
  Change in notes payable                   (1,600)     100
  Change in gas inventory purchase 
     obligations                             1,676    1,371
      Net cash (used in) provided by 
         financing activities                1,703    2,542

Net decrease in cash and cash equivalents     (315)  (4,439)
Cash and cash equivalents at beginning of 
   period                                    3,406    7,845

Cash and cash equivalents at end of period  $3,092   $3,406

Supplemental Disclosures of Cash 
   Flow Information:
  Cash paid during the period for:
      Interest - net of amount 
        capitalized                        $10,067   $9,795

      Income and franchise taxes            $7,258   $6,283

 (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  March 31, 1998 and 1997 and  results  of
   operations  for the three and twelve month  periods  ended
   March  31, 1998 and 1997 and cash flows for the three  and
   twelve month periods ended March 31, 1998 and 1997.

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 periods ending  March  31,
   1998  and  1997  are  not necessarily  indicative  of  the
   results to be expected for the full year.

3. During  the three months ended March 31, 1998, the Company
   issued  40,000  shares of Common Stock, $3.33  par  value,
   under  a  Dividend Reinvestment and Common Stock  Purchase
   Plan  and  under an Employee Savings Plan.  As  a  result,
   Common  Stock,  $3.33  par value, increased  $132,000  and
   Premium on Common Stock increased $985,000.

4. Contingencies

   Reference is made to Note I/Contingencies of the Notes  to
   Consolidated  Financial Statements  contained  within  the
   Company's 1997 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 March 31, 1998 and 1997

Net  income  for  the  three months ending  March  31,  1998
decreased  $1,081,000  or  7.1% to $14,212,000  compared  to
$15,293,000 for the same period last year. Weather  for  the
first quarter was 10.2% warmer than the prior year and 13.5%
warmer than normal, causing a $2,439,000 or 6.2% decrease in
operating margin. Operating income for the Company's utility
operations  decreased $899,000 or 5.3%, despite an  $787,000
or  11%  reduction in operations expense due to  a  $460,000
decrease in bad debt expense, a $156,000 decrease in  health
insurance expense, and a $112,000 decrease in payroll costs.
Income taxes decreased $757,000 or 8.0% due to a lower level
of utility income subject to tax.

Other  operating  income  (net of  income  taxes)  decreased
$34,000 or 26% over the comparable 1997 period primarily  as
a  result  of  a  $36,000 or 45% decrease in net  income  of
Transgas  Inc.,  the  Company's energy trucking  subsidiary,
which  is  attributable  to the warmer  weather.   Hauls  of
liquefied  natural  gas (LNG) decreased  45%  in  the  three
months ended March 30, 1998, compared to the same period  in
1997.

Interest  expense  increased $230,000 or 12%  in  the  three
months ended March 31, 1998 compared to the same period last
year  principally due to the issuance of long-term  debt  to
finance capital expenditures.

         Twelve Months Ended March 31, 1998 and 1997

Net  income  was  $14,959,000 for the twelve  months  ending
March 31, 1998, compared with $16,543,000 for the comparable
1997 period.  This $1,584,000 or 9.6% decrease in net income
primarily  resulted from three factors:  weather  which  was
3.6% warmer than normal and 2% warmer than the prior period;
a  $901,000 or 76% weather-related decline in earnings  from
Transgas   Inc.,  and  a  $953,000  or  8.4%   increase   in
depreciation due to the addition of utility property.

Other  operating  income  (net of  income  taxes)  decreased
$787,000 or 56% compared to the comparable 1997 period.  The
net  income  of  Transgas Inc. for the twelve  months  ended
March  31,  1998 decreased $901,000 or 76% due to  the  warm
winter   of  1997-1998,  which  resulted  in  a  significant
decrease  in  demand  for  energy  trucking  services.   The
decrease  in  Transgas net income was  partially  offset  by
increased merchandise and jobbing net income of $114,000.

Regulatory Matters
On   May   8,   1998,   the  Massachusetts   Department   of
Telecommunications and Energy (the "DTE") opened an industry-
wide investigation into the time period for calculating  the
lost  margins  gas companies are allowed  to  recover  as  a
result  of  their  conservation or  demand  side  management
("DSM")   programs.   The  investigation   was   opened   in
connection with a December 1997 filing by the Company  which
sought the collection of lost DSM margins for the period May
1996 through April 1997.  In that December 1997 filing,  the
Company  used  the  same calculation method  (based  on  the
useful life of installed conservation measures) that it  had
used in filings previously approved by the DTE.  The current
DTE  investigation could result in a shortening of the  time
period  for  calculating lost DSM margins to less  than  the
full useful life of installed measures.  A shortening of the
period  would result in some decrease in operating revenues,
but  it is uncertain at this time whether or by how much the
period  would  be shortened and, therefore, what  impact  it
would have on the Company.

Information Systems
As  part of its ongoing "Genesis" program for automating and
improving  its information systems, the Company  is  in  the
process  of  implementing  a new  customer  information  and
billing system that is expected to be in place by the end of
May  1998.  The new customer information and billing  system
is  designed  to  be  capable of processing  Year  2000  and
subsequent  date data.  Although there can be  no  assurance
until the conversion to the new system is completed, at this 
time the Company does   not   anticipate   any   significant   
implementation difficulties.

Liquidity and Capital Resources
On  April  15, 1998, the quarterly dividend on the Company's
common  stock  was  increased  to  $.345  per  share  or  an
annualized  dividend rate of $1.38 per share.  This  is  the
62nd  consecutive year that the Company has paid a  dividend
to common shareholders and the 19th consecutive year that it
has increased its per share dividend payment.

On  December 9, 1997, the Company received approval from the
DTE  to issue and sell up to 400,000 shares of Common  Stock
pursuant   to  the  Company's  Common  Stock  and   Dividend
Reinvestment Plan.

On   March  20,  1998,  the  Company  issued  the  remaining
$10,000,000  under  its  Medium Term  Note  Program  ("MTN")
(Series  A)  as  a  10-year  First  Mortgage  Bond  with  an
effective rate of 6.38%.

On March 30, 1998, the Company established a new $75,000,000
MTN  Program  (Series B), of which approximately $45,000,000
has   been   authorized  for  issuance  to   date   by   the
Massachusetts  Department of Telecommunications  and  Energy
(DTE).

On  April  2, 1998, the Company called $20,000,000 of  8.05%
First  Mortgage  Bonds (Series CG) one year prior  to  their
maturity, at a price of 102.02%.

On  April 7, 1998, the Company issued $20,000,000 of 30-year
First Mortgage Bonds under its MTN Program (Series B),  with
an effective rate of 6.68%.  The Bonds are redeemable at the
option of the holder in April 2008.
                              
                 PART II - OTHER INFORMATION



Item 5. Other Information

    None





Item 6. Exhibits and Reports on Form 8-K

a.  Exhibits

    4(l)  Fourth Supplemental Indenture          Filed herewith.
          dated as of March 1, 1998 
          relating to the Company's Secured     
          Medium Term Notes, Series B 


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: May 15, 1998            s/F.L. Putnam, III
                                F.L. Putnam, III
                                President and Chief
                                Executive Officer


Date: May 15, 1998            s/Nickolas Stavropoulos
                                Nickolas Stavropoulos
                                Executive Vice President -
                                Finance, Marketing and Chief
                                Financial Officer


      [END OF FORM 10-Q FOR PERIOD ENDING MARCH 31, 1998]