Two energy giants -- Exxon Mobil and Energy Transfer -- are embroiled in a complicated breach on contract lawsuit over disputed payments for the Dakota Access Pipeline (DAPL).

The lawsuit alleges Energy Transfer assessed Exxon Mobil with deficiency charges and revoked other credits after Exxon shifted some oil to other outlets this past August. Exxon has asked a state court in Houston to award it more than $1 million in damages, a return of its revoked credits, attorney fees and other costs.

Background to the dispute: In July 2020, a U.S. District Court suddenly ordered the crude pipeline with a capacity of about 570,000 barrels per day to be shut and gave Energy Transfer 30 days to empty the line, prompting Exxon to scramble to find other ways to move its oil. DAPL is the main artery for shipping crude from North Dakota's Bakken oilfield.

According to its statement to the court, Exxon lined up alternatives that were dwindling "by the hour" as other DAPL shippers sought outlets, and to avoid violating a potential court order.

Not long afterwards, a U.S. Gulf Coast hurricane forced Exxon's Beaumont oil refinery offline, prompting it to declare force majeure on pipeline volumes over four days. Energy Transfer rejected Exxon's force majeure claim.

The refinery is a major consumer of Exxon's DAPL oil.

After the DAPL shutdown, an appeals court reversed the decision, allowing the pipeline to temporarily continue operations. By then, Exxon had shifted 40% of its promised DAPL volumes to other suppliers, according to the lawsuit.
A federal court hearing is set for Friday on whether the pipeline can continue to operate without a crucial permit while the U.S. Army Corps of Engineers conducts an environmental review of line.