Satellite Servicing Redux

No one likes to invite insurance underwriters to parties; those guys never loosen up.

But a rule mandating an underwriter’s presence at every space industry meeting at which the phrase “new era” is spoken would not be a bad idea.

The latest example of such an event was the announcement by Orbital ATK and satellite fleet operator Intelsat that Intelsat would be the first customer for Orbital’s mission extension vehicle, which attaches itself to an aging geostationary-orbit satellite, providing fuel to extend its life by a few years.

It’s a wonderful idea, as appealing in its way as a reusable launch vehicle. Satellite fleet operators spend $250 million to place a satellite into service, only to move it into a graveyard orbit at the end of its 15-17-year lifespan. The satellite’s value is fully depreciated after 15 years’ service life, and another capex cycle commences.

An asset a bit long in the tooth but otherwise in good health, lacking only in fuel, is put to pasture. What a waste.

It was only after Orbital Sciences and ATK merged that the combined company’s chief executive, Orbital founder David W. Thompson, fell in love with in-orbit serving.

Some years back, Thompson the satellite manufacturer had reacted to the satellite servicing idea by saying he’d weld shut the fuel caps on Orbital’s satellites. Now he’s presumably designing a twist-off version.

Intelsat has agreed to be Orbital ATK’s customer for its proposed Mission Extension Vehicle’s first on orbit service call, targeted for a 2018 launch. Credit: Orbital ATK artist's concept

Intelsat has agreed to be Orbital ATK’s customer for its proposed Mission Extension Vehicle’s first on orbit service call, targeted for a 2018 launch. Credit: Orbital ATK artist’s concept

Thompson is paid to look out for shareholder interests. The fact that he was so quickly won over to the project is interesting. He could have discarded it as an unpromising ATK-heritage idea. He must see something that looks like a winning business.

Five years ago, Intelsat partnered with MDA Corp. of Canada on MDA’s satellite-servicing technology, this one a larger vehicle that would fuel a satellite and then perform similar work for other customers along the geostationary arc.

The MDA-Intelsat deal collapsed for multiple reasons — over reliance on Russian technology, the absence of a U.S. government customer as well as the basic business model issues. MDA was also concerned that its work would bump into satellite-servicing projects planned by NASA and the U.S. Defense Advanced Research Projects Agency.

The higher the capital cost of a satellite, the more appealing becomes the idea of extending its service life. The U.S. government manages the highest-cost assets in orbit. It’s hard to see the business taking off without the U.S. defense or intelligence community being in the mix given the risks.

Imagine the scene: An MDA or Orbital ATK refueling craft is headed to geostationary orbit, where several customer satellites await servicing. Recall that the geostationary belt is the single most valuable strip of orbital real estate, a place where the competition for orbital slots can be fierce.

The Orbital ATK and MDA systems likely would connect with their customers not in the geostationary arc itself, but in a graveyard orbit several hundred kilometers above it.

Now comes the underwriter, bearing questions. There are a thousand ways for the mission to go wrong, many of them raising liability issues. Does the servicing company assume all the risk? If so, what insurance cost is it likely to be forced to pay in return for coverage? Would Orbital ATK and MDA embark on this adventure without insurance? Would their satellite fleet operator customers be OK with that?

It’s not party talk, but look on the bright side: the underwriter is unlikely to be the biggest drain on your open bar.