People on Change Islands say they were seeing more oil washing up on the shoreline near their homes in Notre Dame Bay on Saturday.
They believe it's coming from the Manolis L, a cargo ship that sank off the coast nearly 30 years ago.
Earlier this month, people discovered sea ducks covered in oil for the second time this year.
In May, divers with the Canadian Coast Guard sealed the hull of the Manolis L, which had been leaking Bunker C fuel.
Resident Dale Hurley said the situation is just as bad as before.
"You see ducks, a scattered duck in the cove this morning full of oil, and the shoreline just reeks of it," Hurley said.
Hurley said his neighbour has seen oil in the water, as well, and they suspect it's surfacing from the sunken vessel yet again.
"He said it's all in under the slipway this morning. We've had onshore winds from that boat that sunk there a few year ago I guess blowing right from that."
Canadian Coast Guard officials said they have been monitoring the area.
The Cape Roger, one of the Coast Guard's vessels, was sent out to the site on Saturday to check on the latest reports of oil surfacing.