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An Arkansas pipe manufacturer is seeking more than $15 million from a company seeking to build a carbon dioxide pipeline system in Iowa, amid delays in their deal, according to a lawsuit filed this week.
The lawsuit filed by Welspun Tubular says Summit Carbon Solutions ordered the company to produce approximately 750 miles of pipe beginning in May 2023, at a total cost of approximately $183 million.
But Summit’s project — a 2,500-mile pipeline network spanning five states — has taken longer to gain potential approval than the company initially expected. It now says construction could start early next year.
A purchase agreement between the two companies allowed Summit to delay pipe production by up to six months until November 2023, according to the lawsuit filed in court in Delaware, where Welspun is based.
Welspun was able to further delay the start of production until early 2024 by producing pipes for others, which Summit agreed to, court records show.
But when Welspun notified Summit of its plan to continue production in February, Summit again tried to offer a delay, the lawsuit said.
“The Summit requested to discuss the status of the project, and those discussions revealed that the project was dramatically off schedule,” the lawsuit said.
According to the lawsuit, Summit terminated the agreement in February. Welspun claims it entitles it to a cancellation fee of $15 million and a partial refund of the materials it obtained to manufacture the pipe.
Summit disagrees that she is owed the money and hopes to find a compromise.
“Our current dispute with Welspun Tubular centers on timing issues related to pipeline delivery,” the company said in a prepared statement. “We are doing everything we can to resolve this matter quickly and our intention to work with Welspun remains unchanged.”
Summit’s $8.5 billion pipeline system would transport captured carbon dioxide from ethanol plants to North Dakota for underground storage.
The Iowa Utilities Board is close to deciding whether to issue the company a hazardous liquid pipeline permit.
State regulators in North and South Dakota have rejected the company’s original pipeline routes. North Dakota is reconsidering a revised plan and Summit has said it plans to file a new permit application in South Dakota.
This article first appeared in the Iowa Capital Shippinga sister site to the Nebraska Examiner in the States Newsroom network.
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