8-K

             SECURITIES AND EXCHANGE COMMISSION 

                   Washington, D.C 20549

                         FORM 8-K
                      CURRENT REPORT

         Pursuant to Section 13 or 15(d) of the
             Securities Exchange Act of 1934

              Date of Report:  May 28, 1996

                   Colonial Gas Company
     (Exact name of registrant as specified in its charter)


Massachusetts         0-10007               04-1558100
(State of           (Commission File        (IRS Employer
incorporation)         Number)            Identification No.)


          40 Market Street, Lowell, Massachusetts 01853
      (Address of principal executive offices and zip code)        

                        (508) 458-3171
     (Registrant's telephone number, including area code)

                     [END OF COVER PAGE]

Item 5.  Other Events

     On May 28, 1996, Colonial Gas Company ("Colonial") jointly
announced with Cabot LNG Corporation ("Cabot") the intention to
form a joint venture.  The joint venture will be accomplished 
through (i) Cabot acquiring from Colonial a fifty percent (50%) 
interest in Transgas Inc., a trucking company specializing in
liquefied natural gas ("LNG") hauling that is presently a
wholly-owned Colonial subsidiary; and (ii) Cabot and Colonial 
creating a new entity that will lease a Colonial LNG storage
tank and market LNG storage and related services to energy
providers and end-users.  A May 28, 1996 Press Release, jointly
issued by Colonial and Cabot and further detailing the joint 
venture, is included herewith as Exhibit 20 and is also
incorporated herein by reference.

Item 7.  Financial Statements, Pro Forma Financial Information
         and Exhibits:

    (c)  Exhibits:

         Number and Description of Exhibit

         20.  May 28, 1996 Press Release entitled "Colonial Gas
              Company and Cabot LNG Corporation Announce Joint
              Venture, New Initiatives call for 50/50
              Ownership of Transgas Inc., Joint LNG Storage
              Venture."

                          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 hereunder duly authorized.

                                COLONIAL GAS COMPANY

Date:  May 29, 1996             By:  /s/ Nickolas Stavropoulos
                                     Executive Vice President-
                                     Finance, Marketing and
                                     Chief Financial Officer

EX-20

[EXHIBIT 20 TO COLONIAL GAS COMPANY FORM 8-K DATED MAY 28, 1996]


Contacts: Nickolas Stavropoulos      Gordon Shearer, President
          Executive Vice President-  or
          Finance, Marketing and     Joseph Teves
          Chief Financial Officer    Executive Vice President
          Colonial Gas Company       Cabot LNG Corporation
          (508) 458-3171             (617) 526-8300


FOR IMMEDIATE RELEASE:
May 28, 1996


       Colonial Gas Company and Cabot LNG Corporation
                   Announce Joint Venture

          New Initiatives Call for 50/50 Ownership 
                      of Transgas Inc.,
                  Joint LNG Storage Venture


Lowell,  MA  (May  28,  1996)----In  a  major   move
designed to capitalize on new opportunities  in  the
increasingly   deregulated  natural  gas   industry,
Colonial  Gas  Company  and  Cabot  LNG  Corporation
announced  that they intend to form a joint  venture
designed  to enhance the overall value of  liquefied
natural gas (LNG) as a competitive supplemental fuel
choice.   Through this joint venture, the  companies
will jointly own Transgas Inc. and a new entity that
together  will  provide  LNG trucking,  storage  and
related  services  to  the  energy  market  in   the
Northeast United States.
                              
       Cabot LNG to Buy a 50% Ownership 
               Share of Transgas

Cabot  LNG  Corporation,  the  largest  importer  of
liquefied  natural  gas in the United  States,  will
acquire  for $7 million a 50% ownership interest  in
Colonial's  wholly-owned subsidiary, Transgas  Inc.,
the nation's leading LNG trucking company.  Colonial
Gas  Company  will recognize a gain of approximately
$0.40  per  share  at the time  of  the  sale.   The
proceeds from this transaction will provide Colonial
with  additional financial flexibility necessary  to
compete   effectively  in  the  deregulated   energy
marketplace.

In  addition to enhancing the financial position  of
Colonial and its shareholders, the transaction  also
provides  clear benefits for both Transgas  and  its
customers.  Transgas will continue to operate as  an
independent  business unit, headed by  Victor  Baur,
who will continue as President of Transgas.

       New Joint Venture to Provide LNG 
         Storage and Related Services

Colonial  and  Cabot LNG will create a jointly-owned
new business entity that will market LNG storage and
related  services to energy providers and  end-users
throughout  the region.  The yet-to-be named  entity
will lease for 20 years Colonial's one billion cubic
foot   LNG  storage  tank  and  related  facilities;
Colonial will continue to operate the facility.

While Colonial's operating and maintenance costs per
customer  are already the lowest of all New  England
gas  companies, this lease agreement will enable the
company to further reduce its costs, augmenting  its
aggressive  efforts to defer a rate  increase  until
the  next century.  In addition to promoting  stable
rates,  the  new joint venture agreement will  allow
Colonial  to continue to meet the supplemental  fuel
requirements of its customers with the  same  degree
of reliability as in the past.

     An Alliance Designed to Meet the Needs
            of a Growing LNG Market

The  extreme weather conditions of this past  winter
presented  the  first  real  test  of  natural   gas
resources   since   Federal  deregulation   of   the
interstate natural gas pipeline delivery  system  in
1993.  The extremely high demand for natural gas  in
the    Northeast   during   prolonged   cold   snaps
demonstrated  the  value  of  natural  gas  storage,
particularly   "market   area"   storage   of   LNG.
Colonial's  new alliance with Cabot LNG will  create
an  effective  network  of LNG  services  to  assist
suppliers  and end-users in satisfying  their  needs
for reliable and flexible market area storage.

Through  this  strategic  initiative,  Colonial  and
Cabot LNG intend to offer expanded LNG services at a
time  when deregulation is expected to saturate  the
New  England  region  with growing  numbers  of  gas
supply   competitors,  all  of  whom  will   require
supplemental fuel capabilities.  F. L. Putnam,  III,
President  and  CEO of Colonial Gas  Company,  said,
"The combination of Cabot's LNG supply business with
Colonial's  LNG trucking and storage  services  will
enhance  the  overall value of LNG as a  competitive
supplemental fuel source, driving up demand  in  the
wake  of  deregulation  and creating  a  high-growth
environment for both the new LNG storage entity  and
Transgas."

Gordon  Shearer, President of Cabot LNG Corporation,
said,   "This  new  venture  represents  a   further
commitment  by Cabot LNG to develop the  market  for
LNG  and  related services in the  region.   With  a
growing  demand  for natural gas on a  flexible  and
price competitive basis, Cabot LNG believes that LNG
is  best  positioned to meet these needs.  This  new
venture,  along  with  our  commitment  to   acquire
significant  volumes of LNG from  the  Atlantic  LNG
Project  in Trinidad, and the proposed expansion  of
our  Everett LNG terminal underscores our commitment
to  be a significant gas supplier to the region.  It
also  furthers  our relationship  with  one  of  our
largest and oldest customers."



Colonial  Gas Company (NASDAQ:CGES), a Massachusetts
corporation formed in 1849, is primarily a regulated
natural   gas  distribution  utility.   The  Company
serves   over  141,000  utility  customers   in   24
municipalities located northwest of  Boston  and  on
Cape  Cod.   Through its subsidiary, Transgas  Inc.,
the     Company    also    provides    over-the-road
transportation  of liquefied natural  gas,  propane,
and other commodities.


Cabot  LNG  Corporation, established in 1989,  is  a
subsidiary   of   Boston-based   Cabot   Corporation
(NYSE:CBT).   The Company imports liquefied  natural
gas  via  the  Everett, Mass., LNG  import  terminal
owned  by its subsidiary, Distrigas of Massachusetts
Corporation,  to meet the specialized needs  of  gas
and  electric utilities, independent power producers
and industry.  Cabot LNG holds a 10 percent interest
in the planned LNG export project being developed by
Atlantic LNG Company of Trinidad and Tobago at Point
Fortin,  Trinidad, and holds purchase contracts  for
60   percent  of  the  plant's  design  capacity  of
approximately 400 million cubic feet of LNG per  day
which is targeted for Northeast markets.


[END OF EXHIBIT 20 TO COLONIAL GAS COMPANY FORM 8-K
               DATED MAY 28, 1996]