This is a fascinating (to MDN) story about where the industry and economics for shale gas drilling may be heading. Yesterday LSB Industries, an Oklahoma City chemical (and equipment) manufacturer that depends on natural gas as its raw materials, announced they have purchased ownership interest in 14 producing natural gas wells, 7 soon-to-be producing wells and 36 yet-to-drilled wells in the Marcellus Shale, in Wyoming County, PA.
Why would a manufacturing company invest in natural gas wells? As a hedge against natural gas prices going higher—which they believe is going to happen relatively soon. They want a piece of the action that supplies their company with a key raw material, to keep their future costs down. Smart.