The $7.2 million increase in operating expenses for 2010 compared to 2009 was primarily due to increases in system maintenance expenses, primarily attributable to increased system volumes and unplanned repairs at the Eunice plant.

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

The $70.5 million increase in gross margin for 2010 was primarily due to higher commodity sales price ($303.9 million), higher natural gas and NGL sales volumes ($22.6 million) and higher fee based and other revenue of $4.5 million offset by lower condensate sales volumes ($6.8 million) and higher product purchases of $253.6 million. The increased natural gas and NGL sales volumes were due primarily to higher natural gas and NGL production.

The increase in operating expenses was primarily due to higher system maintenance expenses ($8.2 million), higher compensation and benefit costs ($4.7 million) and higher contract and professional service expenses ($2.0 million).

Coastal Gathering and Processing Segment

The Coastal Gathering and Processing segment assets are located in the onshore region of the Louisiana Gulf Coast and the Gulf of Mexico. With the strategic location of the Partnership's assets in Louisiana, it has access to the Henry Hub, the largest natural gas hub in the U.S., and a substantial NGL distribution system with access to markets throughout Louisiana and the southeast U.S.

The following table provides summary data regarding results of operations of this segment for the periods indicated:
   Three Months Ended December 31,   Year Ended December 31, 
   2010   2009   2010   2009 
   ($ in millions, except price data) 
Gross margin  $ 44.9  $ 45.0  $ 151.2  $ 132.7
Operating expenses  (12.0)  (8.1)  (43.4)  (43.0)
Operating margin  $ 32.9  $ 36.9  $ 107.8  $ 89.7
         
Operating statistics:        
Plant natural gas inlet, MMcf/d (2)      
LOU  166.9  200.5  184.6  180.8
Coastal Straddles  972.6  1,105.5  1,068.4  1,014.0
VESCO  439.3  387.6  427.3  363.0
   1,578.8  1,693.6  1,680.3  1,557.8
         
Gross NGL production, MBbl/d        
LOU  6.5  8.4  7.2  8.5
Coastal Straddles  18.2  20.8  19.7  17.2
VESCO  23.9  23.8  23.2  22.8
   48.6  53.0  50.1  48.5
         
Natural gas sales, BBtu/d (1)  258.8  285.9  293.6  258.4
Condensate sales, MBbl/d (1)  0.1  1.8  0.5  1.6
Average realized prices:        
Natural gas, $/MMBtu  3.91  4.29  4.48  4.00
NGL, $/gal  1.13  0.98  1.03  0.77
Condensate, $/Bbl  83.65  47.30  78.82  53.31
         
(1) Segment operating statistics include the effect of intersegment sales, which have been eliminated from the consolidated presentation. For all volume statistics presented, the numerator is the total volume sold during the applicable period and the denominator is the number of calendar days during the applicable period.
(2) The majority of the Coastal Straddles plant volumes are gathered on third party offshore pipeline systems and delivered to the plant inlets.

Three Months Ended December 31, 2010 Compared to Three Months Ended December 31, 2009

Gross margin for 2010 was flat when compared to 2009 due to an increase in commodity sales prices ($13.6 million) and decreases in product purchase costs ($13.5 million), offset by a decrease in commodity sales volumes ($21.5 million) and fee-based and other revenues ($5.6 million). Natural gas sales volumes decreased due to decreased sales to affiliates and to the Partnership's industrial customers. NGL sales volumes decreased primarily due to reduced plant inlet volumes resulting from a decline in traditional wellhead and offshore supply volumes. 

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