Crews working to lift the Helena Star determined the vessel was too deteriorated to be raised as planned.
Ecology said Friday that U.S. Coast Guard, state and local officials are figuring out the safest way to clean the vessel and remove it from the waterway.
Officials hope to tow the vessel to a dry dock in Seattle where it will be dismantled and disposed of.
Crews lifted the ship for a first look on Thursday and set it back down. A few gallons of oil spilled, but were contained within boom placed around the vessel.