Kinder Morgan's much-anticipated $2 billion Permian Highway natural gas pipeline, to connect the oversupplied basin to US Gulf Coast markets, is expected be in service later than expected because of regulatory delays.

In its Wednesday earnings release, Kinder Morgan said that construction on the 2.1 billion cubic feet per day project had begun near the Waha hub in West Texas and nearly 85% of the right-of-way along the entire 430-mile route had been secured. However, the company now expects the pipeline to be in service in early 2021, compared to a previous target of late 2020.

Kinder Morgan blamed a "slower than anticipated pace of regulatory approvals" for the delays.

Lack of pipeline capacity is one of the Permian's most pressing problems as excess supply has caused local prices of associated natural gas to crash. Takeaway problems have also forced producers to flare excess gas.

Another Kinder Morgan-operated natural gas pipeline out of the Permian, the Gulf Coast Express (GCX), went into service in September, giving a boost to regional prices.

"GCX will play a significant role in reducing flaring in West Texas by providing an outlet for associated gas produced in the Permian," Kinder Morgan chief executive Steve Kean said.

The US pipeline giant will build and operate the project with a 26.6% stake. Apache's pipeline subsidiary Altus Midtsream and smaller midstream player EagleClaw Midstream also hold a 26.6% stake, and the remaining 20% is held by an anchor shipper affiliate.

The total 2.1 Bcf/d of capacity is fully subscribed under long-term, binding agreements, Kinder Morgan said Wednesday.

Kinder Morgan is also developing the Elba Island liquefied natural gas facility in the US state of Georgia. The terminal is gradually coming online, with the first of 10 liquefaction modules being placed in commercial service in late September.

Start-up activities are now under way on the second and third modules, while units four through six are in the commissioning phase, Kean said. Construction on the remaining units is "largely complete", he added.

Kinder Morgan reported a third-quarter net income available to common stockholders of $506 million, compared to $693 million for the third quarter of 2018. Kinder Morgan said the decline in year-on-year net income because of gains in the prior-year-quarter from the sale of the Trans Mountain project to the Canadian government.

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Permian Highway start-up date pushed back