Wet, Dry and Lucky

The credo of today’s salvor is fairly straightforward: To be successful, you must retain experience and an emergency response posture while also expanding your other services to provide a stable source of income. And even then you need a little luck on your side!

So says Devon Grennan, President of Seattle-based Global Diving & Salvage. There’s tremendous pressure on the salvage industry these days as overall opportunities are at historic lows, which in turn leads to intense competition when cases do arise. “We are seeing competitors accepting significant contractual risk and performing on extremely tight margins,” he says.

Grennan cites International Salvage Union (ISU) statistics showing that industry revenue has dipped since 2017. And while it’s up from the low point of 2016, it’s still well below the levels of several years ago when annual income was typically more than $700 million.

As a result, Global – like many others – has deliberately narrowed its casualty response business. “Although owning marine assets such as tugs and barges may look to be an advantage for some salvage companies in a tight market,” he says, “I expect more nimble salvors who contract resident assets and resources will emerge and continue to drive pricing down.”

According to the ISU, there were 234 “dry” (emergency response) salvages in 2018 and 71 “wet” (wreck-removal) cases. Grennan says most casualty projects over the past few years have resulted in wreck removal rather than a traditional salvage. The opportunity to salve a vessel is becoming increasingly rare.

Unmanned Systems

Global did have one recent case, though, where a Remotely Operated Vehicle (ROV) was used to recover the tug Samantha J four years after she sank off British Columbia. A unique aspect of the salvage was that it was conducted almost exclusively with unmanned intervention techniques. Working from a derrick barge, Global’s ROV team used a Saab Seaeye Cougar to survey the tug, which was resting in 230 feet of water. The crew then used the ROV’s manipulators to rig a three-point bridle around the vessel so she could be raised.

Resolve Marine Group in Fort Lauderdale also notes the key role of ROVs and associated communications technology as contributing factors to the speed with which it completed oil recovery operations from the World War II wreck Coimbra, located in 180 feet of water off Long Island, New York. Conducted in partnership with the U.S. Coast Guard, both divers and ROVs were tracked electronically on a digital roadmap. Audio and high-definition video were piped to every observation point onboard the support vessel and to decision-makers onshore.

There are estimated to be several thousand such wrecks scattered around the U.S. coast, and Todd Schauer, Director of Operations at Resolve, predicts that completion of such projects will rely more on ROVs in the future – to the point that divers may no longer be required.

Coimbra Project Manager Aaron Jozsef adds that one of the key technologies used was

Resolve’s “Hot Tap” system, which enabled 496,000 gallons of oil to be removed from the decaying vessel's 27 tanks via three- and four-inch pipe in just 87 days. A three-dimensional digital copy of the wreck was made. Ultrasonic testing was used to detect tank thickness, and the “Hot Tap” system enabled fuel sampling through the same port as the eventual removal – with the heavy fuel oil having to be heated prior to pump-out.

“Traditional technology just doesn't get the job done,” he says. “You could be there a year doing it.” The “Hot Tap” system is part of Resolve's emergency kit, and the speed of the operation is key in dry salvage situations.

Bigger Jobs and Stricter Regulations

Ardent's Vice President of Emergency Management, Oliver Timofei, notes that while the number of emergency response incidents has stabilized, the number of bigger, more complex situations requiring a professional salvor is growing. This is partly due to the challenges that come from the increasing size of today’s vessels, he says.

The role of the salvor is also expanding with Ardent increasingly involved in contracts that include the management of the disposal of the wreck and cargo to ensure it conforms with environmental regulations like the Basel Convention, which controls the movement of hazardous waste between nations, and the Hong Kong Convention for safe and environmentally friendly ship recycling.

“In the past, the regulations were not as strict,” Timofei says. “There were more options ten years ago. But the process has become more complex, and proactive owners and insurers are now looking for a one-stop shop to handle the waste management process. We've attended to several container fires this year and had to approach each of them differently. For the more proactive jurisdictions such as the E.U. and Australia, it's no longer possible to find a repair yard based purely on financial benefit.”

Timofei adds that the ISU has been working hard to market the “no cure, no pay” salvage contract, Lloyd’s Open Form (LOF). Under LOF, the salvor receives a proportion of the salved value including the ship, its cargo and bunkers. In 2018 there were 55 LOF projects for ISU members generating income of $104 million, representing 58 percent of all dry salvage revenue and 24 percent of all dry salvage cases.

“It’s still the contract that works best if you look at very complex cases with a lot of stakeholders,” he says. “If you look at a container vessel, the cargo can sometimes generate 60 to 80 percent of the value of the vessel. The ship itself may be just 20 to 40 percent. LOF is still the contract to go for when you have a complex situation because it allows fast decisions to be made to protect the vessel and cargo and minimize the environmental impact.”

Ardent has been working with insurers and large container shipping lines, as well as industry players in the cruise, LNG, tanker and bulker markets, to prepare customers for a potential incident and provide transparency in its contracting – before an incident occurs. The company provides an emergency response manual and puts arrangements in place so that all parties know what to expect. “They have control,” says Timofei. “Therefore they are much more positive about using an LOF with us.”

Timofei also notes the growing use of technology with Ardent's role as a subsea and decommissioning provider to the oil and gas industry being a key advantage. As part of Ardent's diversification strategy, these offshore services now provide around 25 percent of company revenue.

Diversified Offerings

AMIX Group's Director of Sales, Tony Marra, notes the key role of diversification in the Canadian company's success. Using the example of marine pilings, he says AMIX can provide new piling through AMIX Steel & Surplus or Western Concrete; pull out the old pile and install the new one using AMIX Marine Projects and AMIX Marine Services; and then either salvage or recycle the old one through AMIX Marine Salvage.

“Supporting our operations is a fleet of 16 barges, five tugs and eight cranes/crane barges as well as a number of pieces of specialized equipment used for recycling, salvage and heavy lifts,” he explains. “Based at their new location in Campbell River, British Columbia, the assets are readily available for deployment across the entire Pacific Northwest.”

Encompassing all divisions, AMIX Projects acts as a one-stop shop to offer lifting, transporting, storage, transloading and assistance to construction and deconstruction projects. Most recently, AMIX provided shipside support for the Minoan Glory, the bulk carrier that blew a hatch during fumigation of the cargo hold.

AMIX also worked with other industry partners to remove and recycle the crane that collapsed onto a container ship at Vancouver’s Vanterm Terminal in early February. “The Arctic Tuk was on site for about a week,” says Marra, “with our project barge, the NT12000, which has a 15,000-ton capacity. We used specialized recycling equipment, including ‘monster’ shears, to do the final dismantling.”

AMIX Marine Salvage Project Coordinator Chad Carter says the company handles the process of getting a vessel to the stage where it can be recycled by first removing hazardous materials and fluids, then salvaging components of value before ending up with a steel shell that can be recycled, potentially at AMIX’s yard at its new property site in Howe Sound.

Vessels requiring deconstruction come from a variety of sources including the Coast Guard, industry and individuals. However, Carter says, “A very large percent of the vessels of concern and derelict vessels are made of fiberglass or wood and can be found in various states of complete disintegration, offering little salvage value.”

Big Brother to the Rescue

The Canadian Government recently introduced the Wrecked, Abandoned or Hazardous Vessels Act – a move expected to boost activity for salvage companies. ISU statistics show that wreck-removal income has grown during the past decade and remains an important source of revenue for its members. In 2018, 71 operations produced income of $208 million – 51 percent of the year's total income.

Commenting on the statistics, ISU President Charo Coll notes: “There’s fierce competition but professional salvors with their own people, equipment and experience bring an expertise to the most difficult jobs, giving confidence that the operation will be expertly managed, lives saved, the environment protected and the value of property preserved.”