BP Drops One of U.K.'s Largest Hydrogen Projects

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)

Summary 

A dispute over whether a key site in the U.K.'s industrial heartland, Teesside, has led BP to abandon one of the country's largest blue hydrogen projects. 

Blow for U.K.'s Hydrogen Goals

Oil and gas major BP plc (London, England) has ditched plans to build one of the U.K.'s largest planned blue hydrogen projects due to an ongoing dispute over whether the site should be used for an artificial intelligence (AI) data center instead. 

The H2Teesside (H2T) project is targeting 1.2 gigawatts (GW) of hydrogen production in the heavily industrialized Teesside region, which equates to more than 10% of the U.K.'s 2030 hydrogen production target. The goal was to displace existing natural gas consumption by industrial emitters in Teesside, while capturing and sending for secure long-term storage approximately 2 million tonnes of CO2 per year.

However, the project has been delayed over the past year due to a land dispute on usage for the former Redcar Steel site. Landowners South Tees Group (STG) has sought permission to build a data center instead. The dispute is in the hands of the government, which has delayed making a final decision twice.

BP said its withdrawal was related to the "material change in circumstances" the land had faced, referring to a planning application for a proposed data center.

The U.K. government has set an overall target for hydrogen production of 10 GW by 2030, with 4 GW allocated for blue hydrogen and 6 GW for green hydrogen produced through electrolysis.

Industrial Info is tracking 135 hydrogen-related projects in the U.K. worth more than US$10.5 billion in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports. 

Reasons for Pulling Out

In a letter sent to the Department for Energy Security and Net Zero (DESNZ), BP stated: "This decision has not been taken lightly and is based on material and significant changes in circumstances in respect to options for the development of the Teesworks site. There is now an intention to bring forward a data centre, which has resulted in a conflict over the same land as H2T.

"While we maintain that a solution which enabled co-existence of both H2T and the proposed data centre on the Teesworks estate could have been identified, we note that the latter has the support of the Redcar and Cleveland Borough Council, who have awarded the primary consent that would be required for the data centre development to proceed. Fundamentally, as per our previous submissions, the two proposals are incompatible on the same piece of land."

Falling Demand for Hydrogen

BP also cited changes in the region's demand for hydrogen. "While we believe that hydrogen could have an important role to play in the future energy market, since the submission of the H2T development consent order (DCO) application and the end of the Examination, the hydrogen demand situation in Teesside has also deteriorated as some major industrial consumers have either scaled back operations or postponed decarbonisation plans, significantly increasing [our] risk in developing the H2 Teesside project."

Government Reaction

Speaking to The Times, a government spokesperson said: "This is a decision taken by BP. We continue to provide a route for hydrogen projects in Teesside, including Tees Green Hydrogen, which is moving towards final investment decision, along with several other projects creating high-quality jobs for the region."

Industrial Info reported last year that BP and the government had agreed on a statement of principles, prompting BP to advance the H2T project by appointing contractors Technip Energies (Paris, France) and Costain (Maidenhead, U.K.) to design the facility and its infrastructure.

Technip Energies would deliver the front-end engineering design (FEED) for the proposed blue hydrogen production facility with integrated carbon capture, while Costain was selected to design the pipeline infrastructure, including a 31-kilometer (km) pipeline distribution network to deliver hydrogen from the site to industry.

For additional information, see August 21, 2024, article--BP Advances Key U.K. Blue Hydrogen Project.

Key Takeaways 

• BP (London, England), has ditched plans to build one of the U.K.'s largest planned blue hydrogen projects
• Ongoing dispute over whether the land will be used for the H2 plant or an AI data center prompted decision
• Loss of H2T deals major blow to U.K. government's overall target for hydrogen production of 10 GW by 2030

About Industrial Info Resources

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).