The first known shipyard at Seaham was that of Thomas Stonehouse, which was located in a "small identation of the shore, which forms the boundary between the parishes of Dalton-le-Dale and Seaham" according to "An Historical, Topographical and Descriptive View of County Durham", 1834. The parish boundary in the 1850s was at Bessy's Hole, which does form a natural indentation into the ground so this is most certainly the site.

At least one slipway was constructed here by Stonehouse & Co, which consisted of himself, Paxton Taylor, George Young, Peter Wood and William Nicholson. No known ships are known to have been built in the year Stonehouse led the yard, and may have ran into financial difficulties before they could ever have completed a vessel. The company was dissolved on 21/01/1832, and notices were placed in regional newspapers. The Newcastle Chronicle of 25/02/1832 notes that the firm would be dissolved and the yard carried on under the name of "Taylor & Co.", with all debts owing to be paid by them.

Paxton Taylor, originally from Easington, was one of the original partners. He had originally learnt his trade as an apprentice at the shipyard of Benjamin Heward at Southwick, which was operating in the early 1800s. The first known ship to be launched was "a large and handsome vessel, named the Wansbeck". It could carry 18 keels of coal, but the guides on the slipway slipped and she ended up dropping on the sand. As she was so heavy she became embedded into the beach, and couldn't be moved until the tide came in. It took 3 weeks for the ship to be released with help of a hydraulic screw.

This unsuccessful launch may have been his downfall, however we don't know for definite. He did still have a good shipbuilding reputation, but if they couldn't launch the boat effectively this could have deterred potential contracts. The only other fragment of information on Paxton Taylor was that in 1836 he was in debtor's prison, presumably for the costs of running his business.

The yard does not appear on the first Ordnance Survey of the 1850s, so presumably had fell into disrepair or was fully demolished in the coming years. Today the area has been entirely redeveloped and no trace remains.