BP Abandons H2Teesside Carbon Capture & Hydrogen Scheme Amid AI Push

BP plc BP, an oil and gas giant, has scrapped plans for the construction of a large hydrogen and carbon capture project at Teesside in north-east England. Per the Financial Times, the company moved ahead with this decision after the authorities reportedly chose the Teesside location to be used to build an AI growth zone.BP’s decision to abandon its “H2Teesside” project, announced in 2021, will instead allow for the construction of a large artificial intelligence data center at the site. This proposal involves building a data center spanning almost 500,000 square meters, intended to be the largest one in Europe, according to the Financial Times. This plan also has the backing of the Department for Science, Innovation and Technology.The UK government introduced these “AI growth zones” within the AI Opportunities Action Plan in January. As part of the plan, the government offers specific geographic areas to push for the development of artificial intelligence infrastructure. The companies can benefit from this by receiving simplified planning approvals and preferential access to energy, as data centers require massive amounts of electricity.Weaker Hydrogen Demand Undermines H2Teesside ViabilityBP’s “H2Teesside” scheme was intended to produce blue hydrogen by extracting hydrogen from natural gas. The carbon dioxide produced in the process would have been captured and stored. BP’s decision to scrap this project was also influenced by weaker demand for low-carbon hydrogen. Initially, the company expected this project to produce 20% of the targeted production of hydrogen in the UK by 2030. However, the closure of a nearby site owned by the chemical giant Sabic, viewed as a potential customer, reduced the viability of the project. The demand for hydrogen produced this way has long faced challenges due to the high costs associated with its production. This marks a major setback for the UK government’s strategy to accelerate hydrogen production.BP Remains Committed to TeessideBP has decided to abandon the hydrogen project, but it is not withdrawing from Teesside entirely. The company stated that it will remain an “active partner” in the region, indicating that it will be involved in other energy initiatives. BP has highlighted that it is working with partners on a new gas-fired power station in the region equipped with carbon capture technology. Along with this, it is also involved in the development of carbon dioxide pipelines and a carbon storage site.BP’s Zacks Rank and Key PicksBP currently carries a Zacks Rank #3 (Hold).Some top-ranked stocks from the energy sector are Canadian Natural Resources Ltd. CNQ, Oceaneering International OII and FuelCell Energy FCEL. While Canadian Natural Resources currently sports a Zacks Rank #1 (Strong Buy), Oceaneering and FuelCell carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Canadian Natural Resources is one of the largest independent energy companies in Canada engaged in the exploration, development and production of oil and natural gas. The company boasts a diversified portfolio of crude oil, natural gas, bitumen and synthetic crude oil. It has delivered 25 consecutive years of dividend increases, one of the longest streaks among global oil producers.Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. The company is a leading provider of offshore equipment and technology solutions to the energy industry. OII’s proven ability to deliver innovative, integrated solutions supports ongoing client retention and new business opportunities, ensuring steady revenue growth.FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. 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(FCEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks