Oil and gas giant BP has scrapped plans for its Teesside hydrogen plant in the northeast of England after a data center received planning permission at the same site.

The data center received planning permission in August. The proposal was submitted in June by Teesworks Ltd, the public-private partnership that is developing the Teesworks site, a former steelworks located outside Middlesbrough. If built, the data center would span 500,000 sqm (5.38 million sq ft) and comprise six two-story data halls. Information on the data center’s end user or capacity has yet to be disclosed.

BP’s H2Teesside project was first announced back in 2021. A blue hydrogen project – powered via natural gas – it was initially planned to have a capacity of up to 1.2GW, producing approximately 160,000 tons of low-carbon hydrogen annually with a target of capturing around 2 million tons of CO2 per year for storage.

Following the data center’s approval, BP said that its hydrogen project had been rendered “incompatible.” In addition, the company noted that deteriorating demand across the hydrogen sector had played a significant role in its decision-making. Several major offtakers for the plant either scaled back operations or postponed decarbonisation plans, increasing the project’s risk profile, BP said in a letter to the regulator.

The decision is indicative of a broader strategy shift by BP, which earlier in the year pivoted its strategic focus back to oil and gas following failed bets on low-carbon options. Notably, last year it sold off its global offshore portfolio and exited Australia’s green hydrogen hub. BP also cancelled its other hydrogen project planned in Teesside, HyGreen Teesside, in March.

While BP has scrapped the hydrogen project, it said that it expects to continue development on its gas-fired power station with carbon capture at Teesside and a regional carbon storage scheme.

Several data center developers are seeking to locate their facilities in Teesside. In September, it was reported that Google was looking to develop a data center at the Teesworks regeneration project, a 4,500-acre brownfield project.

In July 2025, reports emerged that the UK government was planning to convert the former steel site in Teesside into a data center project, aiming to establish its second “AI Growth Zone.”

At the time, it was said that the Department for Science, Innovation and Technology was closely involved in negotiations with an unnamed major investor.