Profiteering in Space

Is space the new black?  Well, I’m probably the last to know, but 2012 had some amazing “firsts”:  in March of that year, an Austrian daredevil named Felix Baumgartner made a 24-mile skydive; in that same month, an unmanned commercial space capsule named Dragon linked up with the International Space Station; in August the rover Curiosity landed on Mars, and Neil Armstrong, the first person to walk on the moon, died.

With all the news about the privatization of space in the last couple of years, I’ve been wondering just how many ways there are to make money out there.  Well, it appears there are at least 10—and at least 38 companies already in existence to profit from what they hope is a gold mine in outer space.  Many of them are publically held, meaning that ordinary people can buy their stock.  And as far as I can tell, all of these companies come from Europe or the United States; if any non-western countries are represented, I can’t find them.

Pretty astonishing, no?

The term being used to describe these ventures is “NewSpace”, which replaced the earlier moniker “alt.space”, used in the mid 2000’s.  What NewSpace companies have in common is that they are funded by private means and only use government funding as secondary sources.  Thus far in 2013, ten billionaires have made investments in these ventures, including folks like Larry Page (a Google founder), Paul Allen (a Microsoft founder), Jeff Bezos (founder of Amazon), Eric Schmidt (CEO of Google), and Sir Richard Branson (founder of Virgin Atlantic Airways).   

There are several things of significance here, not the least of which is that gambling on making money from space is both a high-risk and a high-reward venture, just the sort of activity you’d expect from western entrepreneurs.  It may also mean that should space offer significant business opportunities, the western world will benefit the most—both in dollars (or pounds or euros) and in natural resources.  Not to mention experience.

But before we get into the specifics of the opportunities, we should define some terms.  First of all, what is “space”?  Well, as you might expect, there is no firm boundary to tell you when you are officially in outer space.  However, 62 miles above sea level is the generally accepted line.  Above this point there is no significant atmosphere.  If you’ve ever seen the northern lights, then you know where this approximate boundary is.  Meteor showers show up below this point (at altitudes of about 50 miles), weather balloons go as high as 30 miles, and Felix Baumgartner skydived from 24 miles up.  An astronaut is someone who has been more than 50 miles above the earth  

Now, you might think that being 62 miles up, or in outer space, is a long way from home.  However, it is lower than “low earth orbit” (LEO), which encompasses altitudes between 100 and 1,200 miles.  The International Space Station is at an altitude of 250 miles, and the Hubble Space Telescope is at 347 miles.  The Shuttle was designed to operate at 120 to 600 miles above the earth.  Sputnik, the first satellite, orbited at 133 miles.  Satellites involved with remote sensing occupy the range of altitudes between 370 and 500 miles, and most communications satellites are within LEO.

“Medium earth orbit”, or MEO, ranges from 1,240 miles to 21,000 miles, and this is where the so-called “geostationary satellites” operate—these are the ones we use for our GPS devices.  

I presume that, like me, almost everyone would guess that most (or all) of the manmade devices in outer space were put there by some government.  And I presume it would not be a surprise to learn that the United States and Russia have launched the most satellites.

But in researching this blog, I was pretty shocked to learn that Orbital Sciences Corporation, located in Vienna, Virginia, has been manufacturing and launching satellites since 1982!  And it is no tiny company—with 3,700 employees and revenues of $1.3 billion, they’ve built 174 satellites and 569 launch vehicles.  

So contrary to what some of the recent news would have you believe, the commercialization of space started several decades ago.  But perhaps it is fair to say that the momentum is building.

And here, in my opinion, are the top 10 commercial markets with the potential for generating money in space:

  1. Rockets, Satellites, and Launch Systems
  2. Space Tourism
  3. Resource Extraction (including metals and energy)
  4. Earth Reconnaissance
  5. In-Space Services
  6. Spaceports
  7. Space Manufacturing
  8. Microgravity Research
  9. Space Burial
  10. Space Advertising**

 
**  I certainly hope space advertising never gets off the ground.  I mean, can you picture a huge billboard visible from earth advertising Coke?  No thanks.  Where is Lady Bird Johnson when you need her?

I would presume that the first category—Rockets, Satellites, and Launch Systems—is the most well-known and the easiest to understand.  Many people are familiar with SpaceX’s successful delivery of cargo to the International Space Station in 2012 and the safe return of cargo back to Earth in a craft (the Dragon) that SpaceX designed and built.  They have a manned flight planned for the next 2-3 years, and according to their website, they already have contracts in place representing 50 future launches and $5 billion in revenue.  

The idea of Space Tourism is also pretty easy to understand—simply, you pay to take a ride into space.  To date, there appears to be only one company in this business arena:  Space Adventures.  They have arranged for seven people to fly into space already (the first tourist went to space in 2001 on a flight to the International Space Station), and the company claims to have already booked half a billion dollars in future flights (the seven tourists who have already gone into space paid between $20 and $40 million apiece).  Other companies currently have plans to enter this “space”.   For example, Virgin Galactic is hoping to have routine commercial flights that take six passengers at a time up to an altitude of 68 miles.  For only $200,000, you can get yourself a seat on one of these flights, but better hurry—according to the company’s website, at least 500 people have already made a $20,000 down payment.

A handful of companies appear to be involved in what I’ve called Earth Reconnaissance (number 4 on the list).  These are companies that have built and are operating satellites to take high-resolution photos and videos of planet earth.  Two companies in this space—Skybox Imaging and Planet Labs—envision “flocks” of satellites imaging the entire earth multiple times a day.   The anticipated markets for these exceedingly high-resolution images include the oil and gas industry, real estate and construction, natural resource management, mining, maritime ship tracking and guidance, insurance and infrastructure monitoring, urban planning, emergency response, and crop intelligence.  

Planet Labs launched two microsatellites called Dove-1 and Dove-2 as test subjects in the spring of 2013, and by December, they hope to have a flock of 28.   These microsatellites are indeed tiny—having a volume of about a quart and weighing in at about 3 pounds (this was truly astonishing to me, as prior to researching this blog post, I thought a satellite was about the size of a room).  And in a spirit of full disclosure, I must acknowledge that one of my sons is an employee of Planet Labs—so in a roundabout way I’m benefiting from the commercialization of space too.

Moving from the “here and now” to more futuristic space endeavors, some companies are targeting asteroids, moons, and planets for Resource Extraction, number 3 on my list—the mining of minerals and/or fuel.  Now it seems to me that this would be unrealistically expensive at the present time since the value of any minerals or fuel brought to earth from space would be dwarfed by the cost of extraction and transportation.  However, having said that, in 2012 some very smart entrepreneurs such as James Cameron (film director) and Larry Page (Google founder) started a company called Planetary Resources.   

The business concept behind Planetary Resources is focused on the potential depletion of some of the earth’s minerals.  For example, platinum (used in circuit boards) may be depleted in as little as 20-30 years.  Claims are made on the company’s website that a 1,500-foot-wide asteroid contains 174 times the earth’s current yearly output of platinum. I’m not sure how much faith to place in these numbers because it doesn’t appear that scientists are THAT certain about the composition of asteroids.  NASA is planning an unmanned expedition to an asteroid in 2016 for the purpose of taking a sample, but it is claimed that a small asteroid only 30 feet in diameter would contain 110 pounds of rare metals like platinum and gold.

It seems to me that bringing back large quantities of gold and platinum would collapse the world price of these metals—the old supply and demand curve at work—and thus jeopardize Planetary Resources’ business model.  It might even jeopardize the economies of whole countries, not to mention the bank accounts of individuals whose assets are tied up in precious metals.  But having an overabundance of minerals should ultimately be to the world’s benefit, as it would certainly diminish concerns about the earth running out of resources.

Interestingly, the first project Planetary Resources is working on is a space telescope with the catchy name of ARKYD 100.  It is not clear exactly what this telescope is going to do, but certainly one use is to determine the composition of asteroids.

The thing on my list that really shocked me was Space Burial (#9).  I never suspected that companies actually exist to do this, but in fact it has been going on since 1997, when a portion of the cremated remains of four individuals (including Gene Roddenberry, creator of Star Trek, and Timothy Leary, LSD head-case) were launched into space as a minor part of flights with a different primary purpose.  One particular company, named Celestis, seems to have been involved in all space burials to date.  It has conducted 13 burial missions so far, the last of which involved the remains of 308 individuals that went to space aboard the SpaceX Dragon in 2012.  What Celestis does is handle the placement of cremated remains on a space flight, either 1 gram or 7 grams depending on the level of, ugh, “service.”  There are four different categories of service ranging in price from $995 to $12,500: a quick up-into-space-and-down-again, with the remains capsule vaporizing as it re-enters the atmosphere; an earth orbit; a lunar orbit; and a “voyager” service in which the remains are shot out into space.

And last but not least, Space Manufacturing (#7).  No companies are currently manufacturing anything in space, but it is theorized that some important benefits would accrue from space’s low gravity and lack of atmosphere, including the elimination of sedimentation; better control of liquids and gases, and possibly more control over mixing of some compounds.  Since space is ultraclean, processes now requiring clean rooms could benefit too.  There may be other benefits, especially where the manufacturing process requires strong temperature gradients.  

I’d like to finish with some thoughts on one of the pioneers in this field—William Stone, who has the same kind of adventurous personality personified by Lewis and Clark in their exploration of what is now the western United States.  Stone is one of the most incredible athletes in the world, excelling in cave exploration, which requires many diverse skills like mountain climbing, scuba diving, and rock climbing.  In addition, he has developed very specialized equipment for his explorations, ranging from an innovative underwater re-breathing apparatus to 3-D mapping equipment and even a machine for melting through Antarctica ice. Interestingly, he is one of the founders of a company called Shackleton Energy, which was named after Ernest Shackleton, a famous Antarctica explorer.  Shackleton Energy plans to mine the moon for water, which would then be decomposed into oxygen and hydrogen and ultimately re-formulated into hydrogen peroxide for use as rocket fuel.

That pretty much sums it up. The privatization of space will require the brains, imaginations, skills, and daring of our planet’s most intrepid explorers and entrepreneurs.  The Sir Richard Bransons, James Camerons, Larry Pages, and William Stones of the world may be the present-day counterparts of Meriwether Lewis, William Clark and Ernest Shackelton.  I fully expect that William Stone will be a passenger on the first commercial moon landing.
Then he’ll try to go caving on the moon.

Useful References:
http://www.spacex.com/
http://www.planetaryresources.com/
http://www.blueorigin.com/
http://planet-labs.com/
http://www.orbital.com/
http://www.skyboximaging.com/
http://www.thenewamerican.com/tech/space/item/12692-the-promise-of-privatized-space
http://www.bbc.co.uk/news/science-environment-17827347
http://www.stoneaerospace.com/
http://spectrum.ieee.org/aerospace/space-flight/mining-the-moon