Salvage costs climb as Golden Ray cutting resumes

Feb. 26—Cutting resumed shortly after midnight Thursday to remove the engine section from the shipwrecked Golden Ray in the St. Simons Sound — just one more step in a salvage operation that has cost the vessel's owner and insurer a whopping $788 million to date, according to an insurance industry trade magazine.

Salvors stopped cutting for nine days beginning Feb. 16 to revamp the rigging in the VB 10,000, the 255-foot-tall twin-hulled crane vessel tasked with cutting the half-submerged shipwreck into sections and hauling them away. During the shutdown, salvors replaced all of the wiring that connects the VB 10,000's winches to the chain that is doing the cutting, said U.S. Coast Guardsman Michael Himes, spokesman for Unified Command.

The wiring wore down during efforts to cut through the dense layers of interior steel surrounding the engine section, presently the rearmost section of the dwindling shipwreck, Himes said.

Salvors also changed out several 90-foot-long lengths of cutting chain, replacing existing chain with chain made of stronger steel, Himes said.

This third cut into the Golden Ray has taken 29 days and counting, making it the most challenging cut thus far.

Unified Command has maintained for some time that the Golden Ray removal effort is the most costly maritime salvage operation in U.S. history. The Insurer, a United Kingdom-based publication, placed the cost at more than 3/4 of a billion dollars. In an article the publication posted online Thursday, The Insurer reported "that losses from the Golden Ray now stand at $788 million, marking a more than six-fold increase from its initial notification ..."

Unified Command noted that none of this cost is being incurred by U.S. taxpayers. All of the costs for environmental cleanup and shipwreck removal rest with the ship's South Korean owner and its English insurer, Himes said. This is in accordance with the federal Oil Protection Act of 1990, passed by congress in the wake of the disastrous oil tanker Exxon Valdez spill in Prince William Sound, Alaska, in 1989.

The 656-foot-long Golden Ray overturned on its port side on Sept. 8, 2019, while heading out to sea with a cargo of 4,200 vehicles. The car carrier vessel was constructed in 2017.

Salvors plan to cut the ship into eight sections, hauling each away to a Louisiana recycling facility.

Owned by Hyundai Keogh, the Golden Ray's primary insurer was North of England P&I Club. The monumental cost of the Golden Ray's salvage is actually being incurred by a pool of 13 insurance industry firms, according to The Insurer.

Unified Command had no comment on the The Insurer article because the price tag has no bearing on its role, Himes said.

Unified Command consists of the Coast Guard, the state Department of Natural Resources and Gallagher Marine Systems. Its role is is to ensure the Golden Ray's owner and insurer abide by Oil Protection Act environmental protection regulations throughout the salvage operation, Himes said.

"Basically, the insurer is backing the entire response financially," Himes said. "No taxpayer dollars go into funding this response."

The current cost is a substantially sizable spike in the initial estimated costs of the Golden Ray shipwreck, The Insurer reported. Costs for the operation were originally estimated at $440 million and later amended to $660 million before escalating to the present level of $788 million, The Insurer reported.

The Golden Ray's owner contracted with Donjon-SMIT for maritime emergencies. In early January 2020, however, Donjon-SMIT was dropped in favor of Texas-based T&T Salvage LLC to handle the salvage operation.

The Insurer reports that T&T agreed on a fixed contract. But the contract apparently allowed for cost increases based on unforeseen circumstances, including two summertime outbreaks of COVID-19 among salvage workers and Unified Command personnel, The Insurer reported. The Insurer also noted cost increases due to ongoing oil pollution protection efforts were required because of the overall protraction of the salvage operation.

Unified Command anticipated early last summer that each cut could be completed in a week to 10 days with the ship cut up and removed within two months. That was before the COVID-19 outbreak during the summer delayed commencement of the first cut until late fall.

Salvors constructed a 1-mile perimeter environmental protection barrier around the shipwreck, complete with mesh netting and floating oil retention boom lining the surface. More than 30 boats crewed with oil and debris retention teams regularly patrol the waters surrounding the shipwreck and additional personnel scour shorelines for debris and oil pollution.

With just two of six sections removed 18 months after the shipwreck, industry insiders anticipate the cleanup costs will continue to climb, The Insurer reported.

The ship's owner and insurer pay for all costs incurred by environmental protection and salvage operations, Himes said. Direct state and federal dollars spent on the participation of the Georgia DNR and the Coast Guard are reimbursed by the Oil Liability Trust Fund, Himes said. The Oil Liability Trust Fund is paid for by fines, settlements and judgments against past transgressors of the Oil Protection Act, Himes said.

"The response is fully backed by the insurers," Himes said.

As cutting resumed Thursday, cleanup crews on the water have detected only light oil sheens on the water, Himes said. Much of that has been collected by current busters, V-shaped craft placed at either end of the environmental protection barrier to catch leaking oil floating with the ingoing and outgoing tides.

"It's still very much (oil) sheens and most of it's inside the EPB," Himes said. "The thing about oil is it floats. And they can combine that with knowing how the water behaves to do their job of collecting and containing it."