An argument has emerged between the BP-led development of a proposed blue hydrogen production facility at Teesworks and the owner of the land, which has decided to pursue a data centre instead.
The sudden change in plans has come after the development consent order (DCO) application for H2Teesside’s Teesworks hydrogen project had been submitted.
The dispute came to light as the government announced that the decision on H2Teesside’s DCO application was being further delayed. The project had already been delayed by two months from 28 August to 30 October 2025.
The news of the delay was announced to parliament on 30 October via a written ministerial statement from Department for Energy Security and Net Zero parliamentary under-secretary of state Martin McCluskey who “decided to allow an extension and to set a new deadline of 4 December […] to allow time to consider the information further”.
“The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent,” he added.
H2Teeside’s frustration clear in planning submission
H2Teesside aims to be one of the largest blue hydrogen production facilities in the UK, delivering 1.2GW of hydrogen production by 2030. Blue hydrogen is produced from natural gas using a process called steam methane reforming, where the resulting carbon dioxide emissions are captured and stored or used.
In early August, BP announced that Technip Energies would deliver the front end engineering design for H2Teesside’s proposed blue hydrogen production facility with integrated carbon capture. Costain, meanwhile, was selected to design the 31km pipeline distribution network would deliver hydrogen from the blue hydrogen production site to industry.
In a late submission to the Planning Inspectorate dated 19 August, the BP-led H2Teeside project applicant explained that the owner of the land where it had hoped to develop a blue hydrogen production facility had decided instead to pursue an AI data centre.
The owner of the site is called South Tees Group (STG). BBC News reported that STG is owned 90% by two local businessmen – Martin Corney and Chris Musgrave. The partners have previously come under considerable scrutiny for pocketing tens of millions from use of land at Teesside without putting any of their own money in.
H2Teesside, the “applicant”, said in its 19 August letter that it was seeking to respond to points made by STG in a submission to the government about the application. According to H2Teesside, STG said that the hydrogen facility would “prevent the development of the Teesworks Estate” and that “there is insufficient certainty that the Proposed Development will be brought forward”.
The applicant said it “disagrees” with both points.
“The Applicant and STG have been in discussions in respect of the use of the Teesworks Estate for the Proposed Development for over two years. In that time the Applicant has shared all the appropriate information it has available to it,” H2Teesside’s letter said.
“This has given STG the time to decide how to bring forward development in the wider Teesworks Estate.”
It went on to say that H2Teesside Ltd had “been negotiating with STG on the basis that it supports low carbon hydrogen development on its estate and that commercial and land agreements would therefore be able to be agreed to enable those aspirations to be fulfilled.
“For example, the Applicant has worked with STG to undertake extensive Site Investigation work within the Phase 1 land and part of the land that is now proposed for the data centre.”
It added that the applicant had “tried to engage with STG in recent months”.
“While STG’s new aspirations are noted, it is important to recognise that these have emerged at the final stages of an existing DCO application for a type of development which STG had previously encouraged and supported on the same land,” it said.
“STG is asking the secretary of state to support this change of direction and bring forward another development as if the Proposed Development did not exist.”
It went on to encourage the government to approve the DCO for the hydrogen facility.
Landowner says it’s responding to ‘evolving needs of key industries’
Teesworks Ltd is part of STG. Teesworks Ltd chairman Chris Musgrave said: “Teesworks is committed to ensuring that our land usage is aligned with the strategic priorities and evolving needs of key industries.
“While the Government has deferred its decision on BP’s Development Consent Order for H2Teesside, we recognise that major projects of this scale require thorough consideration and due process.
“Our focus remains on enabling job creation, long-term economic growth and generating positive outcomes for the local community.”
Landowner should pursue both data centre and hydrogen project – hydrogen lobbyists
Hydrogen UK advocates on behalf of the hydrogen industry.
Hydrogen UK CEO Clare Jackson said: “Of course, it’s vital that government takes the time to make the right decision, but it also needs to act swiftly and give this project the green light.
“BP’s H2Teesside will create hundreds of new jobs and protect thousands more across local industries. It’s absolutely essential for reindustrialisation as well as decarbonisation in Teesside.
“This can’t be an either or choice between hydrogen and new digital technology. We need both! The UK’s clean energy transition and digital transformation must go hand in hand if we’re serious about jobs and growth.
“Teesside has the skills, the infrastructure and the ambition to deliver both, and now it needs the government’s backing.”
A Hydrogen UK spokesperson confirmed to NCE that Jackson was referring specifically to the Teesworks landowner considering pursuing a data centre development instead of a hydrogen production plant.
Hydrogen UK hopes a solution can be found were both types of facility could “co-exist on the land.”
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