A U.S. subsidiary of one of the largest pipe manufacturers in the world is suing Summit Carbon Solutions, a company planning to build a multi-state carbon sequestration line, for $15 million.

Welspun Tubular, an Arkansas subsidiary of Welspun Corp, a pipe manufacturer from India, filed Monday a complaint against the Iowa carbon transporter for allegedly breaching a purchasing agreement between the two companies, according to court documents obtained by the Argus Leader.

In the original complaint, which was filed in Delaware Superior Court, Welspun states the company was selected to manufacture more than 4.12 million feet of steel pipe for $182.5 million for use in the construction of Summit Carbon's Midwest Carbon Express sequestration line.

However, Summit Carbon canceled the purchase agreement Feb. 19 after a series of delays to the companies planned manufacture of the pipes.

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Welspun is seeking $15 million in compensatory damages as part of a cancelation fee as well as an undetermined amount of money based on the materials purchased to make the pipes.

Summit Carbon is planning to build a $8.5 billion, 2,500-mile sequestration network across five Midwest states, with 57 ethanol facilities connected to the project. This includes over 490 miles of pipe meant to carry liquid carbon dioxide byproducts taken from ethanol plants in eastern South Dakota, which would ultimately be deposited underground at a site in North Dakota.

What does Welspun's complaint against Summit Carbon state?

Court records state the two companies entered a purchase agreement Sept. 16, 2022, with Welspun planning production of the pipe May 8, 2023.

Welspun's contract included a provision to allow Summit Carbon to suspend its purchase agreement for up to six months. During a period of suspension, Welspun would be required to notify Summit Carbon of any third party offers received, to which the latter could either reject the offer and allow production of the pipe to resume or accept the offer and continue the suspension.

Then, from May 11, 2023 to Nov. 8, 2023, Summit Carbon continued to suspend its purchasing agreement, court records show. The two companies agreed to extend the production suspension to Dec. 15, more than a month past the six-month maximum, followed by a second extension to Jan. 2.

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Welspun later told Summit Carbon, a few weeks prior to its final Jan. 2 extension, the pipe manufacturer "intended to begin production of the Summit pipe beginning Feb. 5."

However, sometime between Dec. 18 and Dec. 27, Summit Carbon responded it would be "maintaining the suspension" beyond the Jan. 2 extension, the complaint states, which Welspun did not agree to.

On an undisclosed date, Summit Carbon asked to discuss the status of the project with the pipe maker.

"Those discussions revealed that the project was dramatically off-schedule," Welspun's attorneys wrote in the April 15 complaint. The pipeline company delayed the project's first day of operation to early 2026 after state regulators in South Dakota and North Dakota denied applications for permits to begin construction on the pipeline project.

Summit Carbon first suspended its purchase agreement Jan. 31, 2023, more than eight months before the announced delay.

Summit Carbon spokesperson Sabrina Zenor told the Argus Leader in a Thursday statement the dispute revolves around "timing issues related to pipe delivery."

She also said the lawsuit would not affect the timeline of Summit Carbon's permit application in South Dakota.

"We're committed to resolving this matter swiftly, and our intention to collaborate with Welspun remains unchanged," Zenor wrote. "We anticipate a resolution that aligns with our shared goals: building a pipeline to safely and permanently store CO2, opening access to new markets for ethanol."

Summit Carbon has stated its intention to refile for a permit to build its pipeline in South Dakota. State regulators previously denied the company's initial permit application for its project Sept. 11, 2023.

The Iowa Utilities Board is expected to issue a decision on a similar Summit Carbon permit sometime in 2024.

The North Dakota Public Service Commission denied the company a permit Aug. 4, 2023, but the commission will allow Summit Carbon to make a second case in a new set of hearings starting Monday.

This article originally appeared on Sioux Falls Argus Leader: Welspun Tubular sues Summit Carbon Solutions for breach in purchase deal