The 1895 OS map shows shows the Primitive Methodist chapel on Front Street, on the corner of what is now South Meadows, almost opposite Dipton Manor. Street View in 2016 shows the very same building with the date 1873 carved into the stonework so the chapel would have been 5 years old when your grandfather was baptised there. In 2016 it was in use by Power Tools Services.
You can see that map at: https://maps.nls.uk/view/120934860
By the 1915 Ordnance Survey map there is a new Primitive Methodist chapel – further south, just north of Co-operative Terrace. It is set back from Front Street. Next to Co-operative Villas. This in time became Central Methodist church. Street View in 2016 shows the site occupied by Wesley Cottages. On the 1915 map, the original Prim chapel is now labelled as a picture house.
You can see the 1915 OS map here: https://maps.nls.uk/view/120934863
An article in the Northern Echo dated 3 March 2007 relates the story of the closure of the ex-Pm Chapel at Dipton in 2007 after 100 years of service. The article gives the following history about PM chapels in Dipton.
“The first “Ranters” chapel in the area, at Flint Hill, opened in 1834 and cost £60. When the congregation outgrew the chapel’s welcome, a second was opened in 1873, costing £920 and seating 300 – and when that in turn could barely contain its enthusiasm the present building was constructed for £2,400.”
Richard Jennings has written a comment on our page about East Stanley Primitive Methodist Chapel. He records that a camp meeting was held in 1823 at Collierley Dykes, Dipton. That could have been the beginning of Primitive Methodists activity in the area that led to the first chapel being opened in 1834. There is more about that in a book entitled “Northern Primitive Methodism.” That notes that Dipton is the modern name for Collierley Dykes.