Commercial Production

Think of years of research and development finally culminating in a product actually reaching a shop shelf. Commercial Production is that equivalent milestone in oil and gas, the point at which a field starts producing oil or gas in volumes genuinely sufficient to be sold in the market, marking the end of the long exploration and development journey.

Reaching commercial production, sometimes announced as first oil or first gas, is a significant milestone that companies highlight prominently in investor communications, since it is the point where a field finally shifts from being a capital cost on the balance sheet to a genuine revenue generator.

The gap between a discovery being announced and commercial production actually beginning can span anywhere from a couple of years for a simple onshore field to well over a decade for a complex deepwater project, which is why patience, not just capital, is such a defining trait of successful upstream investors.