Talks to create the largest nitrogen fertilizer company are the latest example of how the boom in natural gas from fracking is transforming not just the world of U.S. energy but other industries too.

Norway’s Yara International ASA and Deerfield, Ill.- based CF Industries Holdings Inc. said they’re in preliminary discussions about a combination. Both make crop nutrients using gas as a raw material. There’s more gas than ever in the U.S. as new drilling techniques open up shale deposits.

“Besides the obvious petrochemical investments occurring in North America to take advantage of low cost gas, the rapid development of unconventional energy resources is buoying other industrial markets,” Paul Bjacek, an analyst at Accenture Plc, said in a blog post.

Cheap gas has spurred more than $124 billion in new factories for chemicals, according to the American Chemistry Council. There’s $12.7 billion of fertilizer plants planned to come into production through 2020, Mark Gulley, an analyst at BGC Financial LP in New York, said in a report.

Gas is used to capture nitrogen from the air in the Haber process, named after German chemist Fritz Haber who developed the technique in the early 20th century. The advantage of doing that in the U.S. is stark: CF’s operating profit margin was 43 percent last year while Yara’s was 9.2%, according to data compiled by Bloomberg.

“The deal would give Yara access to the best nitrogen fertilizer market in the world,” Gulley said in a separate note.

While North America accounts for about 16% of Yara’s revenue, the company is trying to boost that with a planned joint venture with BASF SE in Texas. Yara’s desire to lock in cheaper gas was clear when it tried unsuccessfully to buy Terra Industries Inc., said Colin Isaac, an analyst at Atlantic Equities LLP in London.

Yara was trumped by CF’s $4.7 billion offer for Terra in a deal that closed in 2010.

“To meet their ambition of being global, Yara needs to have a meaningful business in the U.S.,” Isaac said.

CF’s motivation in talking to the Norwegians may be a wish to expand beyond the U.S. in anticipation of rising domestic fertilizer supplies, which may put pressure on prices, Paul A. Massoud, an analyst at Stifel Nicolaus & Co., said in a note yesterday.

All of CF’s production and distribution assets are in North America. It plans to add two new U.S. nitrogen-fertilizer plants, in Louisiana and Iowa, which according to Gulley will raise its output by 28%.

Tax savings for CF may also be an important consideration, said Adam Samuelson, an analyst at Goldman Sachs Group Inc. in New York. CF’s effective tax rate is 31% and Yara’s is 20%, according to data compiled by Bloomberg.

Still, so-called tax inversions that allow a U.S. company to move its tax domicile to another country will be harder to do. On Sept. 22 the U.S. Treasury Department unveiled countermeasures that were effective immediately.

A CF spokesman didn’t immediately return calls seeking further comment on the merger talks. Esben Tuman, a Yara spokesman, declined to comment.

Both companies said yesterday they’re discussing a “merger of equals” and that there’s no guarantee of a deal. A combined CF-Yara would have about $19 billion in sales, more than any other fertilizer company.

Citigroup Inc. and ABG Sundal Collier Holding ASA are advising Yara. Morgan Stanley and Goldman are advising CF, according to a person familiar with the situation.

The merger may lead to more capital being returned to investors via higher dividends and stock buybacks, said the person, who asked not to be identified because the details haven’t been made public.

CF dropped 0.5% to $267.91 at 9:42 a.m. in New York for a market value of $13.3 billion. Yara depositary receipts fell 2.5% to $50.31, giving the company a market capitalization of $13.9 billion.

Last year CF was criticized by activist investor Daniel Loeb’s hedge fund Third Point LLC for having too small a dividend. CF subsequently installed W. Anthony Will as chief executive officer, replacing Stephen Wilson.