Modeling PPP Economic Benefits for Lunar ISRU

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1 Modeling PPP Economic Benefits for Lunar ISRU 2017 LEAG Annual Meeting USRA HQ, Columbia, MD October 11, 2017 Brad R. Blair Founder and General Partner NewSpace Analytics

2 Status Update The NASA Emerging Space Office (ESO) recently selected a proposal entitled PPP framework for multi-commodity lunar ISRU for award under NRA Solicitation NNA15ZBP0001N-B1. PI: Brad Blair Co-I: David Cheuvront Consultants: Hoyt Davidson and Hannah Rens Elements of the Public Private Partnership modeling layer will be emphasized, with solicitation of input by the LEAG community. If everything goes to plan, project kickoff starts next week. The contract duration is 6 months.

3 Relevance to NASA A robust, private-sector commercial lunar ecosystem will prove invaluable to NASA, provisioning propellant, life support consumables and other materials to NASA as one customer among many. This would increase the robustness of NASA s human space exploration missions by providing sustainable, affordable, complementary options that reduce NASA s science and spaceflight costs. A commercial-off-the-shelf (COTS) approach could also lower the risk of NASA program failure and/or requirements creep that typically accompanies cyclical regime change which is especially troubling for long duration programs (indeed, a lack of fully considering economic factors may be the leading cause of agency regime change).

4 Project Objectives The primary objective of this study is quantitative evaluation of PPP scenarios using a commercial lunar mining framework. The proposed work would estimate the effect of both supply and demand side stimulation through PPP scenarios, providing a method to estimate the degree of acceleration and/or risk reduction in the emergence of commercial lunar enterprise. This work will also draw upon comparisons to terrestrial mining activities, where byproducts often generate more operating profit than the primary commodity produced. A secondary objective of the proposed work will examine lunar resource byproduct scenarios that may be synergetic or of low incremental cost to obtain high economic benefit. This secondary activity could also create a tool that could facilitate steering nearterm prospecting and ISRU technology demonstration missions toward commercially useful results.

5 Prior Economic Models

Click to edit Master text styles Second level Third level Fourth level Fifth level The Case for Commercial Lunar Ice Mining by Brad R. Blair, Javier Diaz, Michael B.

6 Click to edit Master text styles Second level Third level Fourth level Fifth level The Case for Commercial Lunar Ice Mining by Brad R. Blair, Javier Diaz, Michael B. Duke, Center for the Commercial Applications of Combustion in Space, Colorado School of Mines, Golden, Colorado Elisabeth Lamassoure, Robert Easter, Jet Propulsion Laboratory, Pasadena, California Mark Oderman, Marc Vaucher CSP Associates, Inc., Cambridge, Massachusetts December, B. Blair SU Econ Lecture, Mtn View, CA July

7 Total Mass [mt] FY02 Parametric Engineering Model Architecture Mass Comparison Arch 1 Arch 2 LEO OTV L1 OTV Lunar lander LEO depot L1 depot Lunar plant Technology assumptions Cryogenic Vehicles (H 2 /O 2 fuel) Lunar Lander Orbital Transfer (OTV) Fuel Depot(s) Solar Power Electrolysis (fuel cell) Tanks for H 2, O 2 and H 2 O Vehicle mass (kg) Moon - L1 (Lander / fuel carrier) 7869 Propulsion system 2180 Telecomm 10 w ater storage (0.01%) 256 C&DH 3 Structures 3482 Pow er 15 Landing System 1801 L1-LEO-L1 Vehicle (fuel carrier) 1424 Propulsion system 636 Telecomm 10 w ater storage (0.01%) 200 C&DH 3 Structures 560 Pow er 15 L1-LEO Aerobrake 3214 LEO-GEO-LEO Vehicle (payload transport) 3422 Propulsion system 1362 Telecomm 10 C&DH 3 Structures 2032 Pow er 15 LEO-GEO-LEO Aerobrake 513 L1-LEO-L1 Vehicle (fuel carrier) 5431 Propulsion system 2088 Telecomm 10 C&DH 3 Structures 3315 Pow er 15 LEO-L1-LEO Aerobrake 3504 ARCH 1 ARCH 2 Lunar Surface Plant Mass (kg) Mass (kg) Excavators Haulers Extractors Electrolyzers Hydrogen liquefiers Hydrogen liquefier radiators Oxygen liquefiers Oxygen liquefier radiators Water tanks Hydrogen tanks Oxygen tanks Aerobrake production system 0 0 Pow er system (nuclear) Ancillary equipment (25% of total) Total Annual refurbishment L-1 Fuel Depot Mass (kg) Mass (kg) Electrolyzers Hydrogen liquefiers Hydrogen liquefier radiators Oxygen liquefiers Oxygen liquefier radiators Water tanks Hydrogen tanks Oxygen tanks Pow er system (solar) Ancillary equipment Total Annual refurbishment LEO Fuel Depot Mass (kg) Mass (kg) Electrolyzers Hydrogen liquefiers 22 0 Hydrogen liquefier radiators Oxygen liquefiers 84 0 Oxygen liquefier radiators 84 0 Water tanks Hydrogen tanks Oxygen tanks Pow er system (solar) 91 0 Ancillary equipment Total Annual refurbishment 170 0

8 Dev + 1st Unit Cost [$B] FY02 Cost Model Development NAFCOM99: Analogy-based cost model Architecture 2 WBS shown on right panel Conservative methodology used SOCM: Operations cost model Estimates system-level operating costs Conservative methodology used Launch Costs: $90k/kg Moon, $35k/kg GEO, $10k/kg LEO SRD Architecture 2 Cost Model ($M FY02 NAFCOM Estimate) Mass (kg) D&D STH FU Prod Total Cost GRAND TOTAL SYSTEM 1: Lunar Surface Mining & Procesing Equipment SYSTEM 2: L1 Depot SYSTEM 3: Lunar Lander SYSTEM 4: OTV (LEO-GEO-L1) Scenarios 1.1c and 1.2: Cost Comparison Arch 1.1c Arch 1.2 LEO OTV L1 OTV Lunar lander LEO depot L1 depot Lunar plant SRD Architecture 2 Cost Model ($M FY02 NAFCOM Estimate) Mass (kg) D&D STH FU Prod Total Cost GRAND TOTAL SYSTEM 1: Lunar Surface Mining & Procesing Equipment HARDWARE TOTAL Regolith Excavator Structure Mobility Excavation Soil Handling CC&DH Regolith Hauler Structure Mobility Soil Handling CC&DH Thermal Extraction Water Electrolysis Hydrogen Liquefier Hydrogen Liquefier Radiators Oxygen Liquefier Oxygen Liquefier Radiators Water Tanks Hydrogen Tanks Oxygen Tanks Pow er System (Nuclear) Maintenanace Facility Mobility Sensors Manipulators CC&DH Spare Parts Ancillary Equipment SYSTEM INTEGRATION SYSTEM 2: L1 Depot HARDWARE TOTAL Water Electrolysis Hydrogen Liquefier Hydrogen Liquefier Radiators Oxygen Liquefier Oxygen Liquefier Radiators Water Tanks Hydrogen Tanks Oxygen Tanks Pow er System (solar) Ancillary Equipment SYSTEM INTEGRATION SYSTEM 3: Lunar Lander HARDWARE TOTAL Propulsion System Water Tanks CC&DH Structure Pow er Landing System SYSTEM INTEGRATION SYSTEM 4: OTV (LEO-GEO-L1) HARDWARE TOTAL Propulsion System CC&DH Structure Pow er Aerobrake SYSTEM INTEGRATION

9 FY02 Demand Model (CSTS) MBS Item Time Frame (modeled markets in bold) ISRU Market Description Short-Term Medium-Term Long-Term 1 Communications Market (commercial) 1 Fixed Satellite Service X X X Orbital Transfer (Deployment) 2 Direct Broadcast Service X X X Orbital Transfer (Deployment) 2 Space Manufacturing 1 Manufacturing X Feedstock, Construction Materials 2 In-Space Processing X X Mineral Feedstock 3 Government Missions 1 Existing Government Missions 1 NASA Missions (Excluding Station) X Orbital Transfer (Deployment) 2 DOD Missions X Orbital Transfer (Deployment + Missions) 2 Increased Space Station Missions 1 Station Deployment X X Orbital Transfer 2 Station Resupply X X X Life Support 3 Station Reboost X X Stationkeeping 3 Human Planetary Exploration 1 Lunar Base Program X Orbital Transfer, Life Support, Construction Materials 2 Mars Design Reference Missions X X Orbital Transfer, Life Support 3 Asteroid Exploration X Orbital Transfer, Life Support 4 Asteroid Detection/Negation (robotic) X X Orbital Transfer (Deployment + Missions) 5 Technology Development Testbed X X X Experimental (e.g., DARPA Orbital Express program) 4 Transportation 1 Space Servicing X X X Orbital Transfer (Deployment + Missions) 2 Hazardous Waste Disposal X Orbital Transfer (Deployment) 3 Space Tourism X X Orbital Transfer, Life Support 5 New Missions 1 Space Debris Management X X X Orbital Transfer (Deployment + Missions) 2 Multiuse LEO Business Park X X Stationkeeping, Life Support 3 Space Settlements X Construction Materials, Life Suppport, Fuels 6 Space Utilities 1 GEO Solar Pow er Satellites X X Orbital Transfer (Deployment), Construction Materials 2 Lunar Based Pow er Station X Construction Materials 3 Space to Space Pow er Beaming X Orbital Transfer (Deployment), Construction Materials

10 NPV [$B] Feasibility Process Summary: Version 0 = Baseline (most conservative) Versions 1-3: Relax assumptions Version 4 shows a positive rate of return for private investment (6%) Version 4 Assumes: Zero non-recurring costs (DDT&E) 30% Production cost reduction 2% Ice concentration 2x Demand level (i.e., 300T/yr) FY02 Feasibility Modeling Architectures 1 and 2: Net Present Value Comparison Version 0 Version 1 Version 2 Version Summary Description 1.1c c c c c Baseline No Non-Rec. Investments No Non-Rec. Investments, 30% Production Cost Reduction No Non-Rec. Investments, 30% Production Cost, 2x Lunar Water Concentration Reduction No Dev. Cost, 30% Production Cost Reduction, 2x More Water on Moon, 2x Demand Baseline Version -all assumptions the same as previously except for demand and architecture changes Assumes the public sector pays for the Non-Recurring Investments (design, development and first unit cost) Assumes the above, and Reduces the First unit production cost of all elements by 30% Assumes all the above, and a Concentration of Water in Lunar Regolith twice higher than the current best estimate. Same as above, and Double the Demand Version 3 Version 4 =FEASIBLE= Arch 1 Arch 2

11 FY02 Commercial Model Results CSP Financial Summary (Architecture 2, Version 4) INCOME STATEMENT Cumulative Revenues $ 0 $ 0 $ 0 $ 600 $ 1,200 $ 1,800 $ 2,400 $ 3,600 $ 4,800 $ 6,000 $ 20,401 Gross Profit $ 0 $ 0 $ 0 $ 539 $ 1,078 $ 1,617 $ 2,155 $ 3,233 $ 4,311 $ 5,388 $ 18,321 EBITDA $ (4) $ (9) $ (10) $ 527 $ 1,065 $ 1,604 $ 2,142 $ 3,219 $ 4,296 $ 5,373 $ 18,205 EBIT $ (4) $ (9) $ (10) $ 373 $ 610 $ 910 $ 1,257 $ 1,970 $ 2,195 $ 3,272 $ 10,565 Net Income $ (4) $ (9) $ (10) $ 184 $ 225 $ 337 $ 510 $ 924 $ 1,058 $ 1,708 $ 4,924 CASH FLOW Cumulative Net Cash From Operations $ (4) $ (9) $ (10) $ 338 $ 680 $ 1,031 $ 1,395 $ 2,173 $ 3,159 $ 3,809 $ 12,563 Net Changes in Working Capital $ 0 $ 0 $ 0 $ (45) $ (45) $ (45) $ (45) $ (90) $ (90) $ (90) $ (448) CAPEX/NRE $ 0 $ 0 $ 1,548 $ 3,018 $ 3,013 $ 2,384 $ 1,910 $ 3,649 $ 4,105 $ 4,410 $ 24,039 Taxes $ - $ - $ - $ 107 $ 150 $ 225 $ 340 $ 616 $ 706 $ 1,138 $ 3,282 Annual Cash (Shortfall) Surplus $ (4) $ (8) $ (1,557) $ (2,725) $ (2,378) $ (1,399) $ (560) $ (2,928) $ (2,224) $ (1,391) $ (15,174) Equity Financing $ 104 $ 8 $ 1,557 $ 1,363 $ 1,189 $ 699 $ 280 $ 1,464 $ 1,112 $ 695 $ 8,472 Debt Financing $ - $ - $ - $ 1,363 $ 1,189 $ 699 $ 280 $ 1,464 $ 1,112 $ 695 $ 6,802 Principal and Interest Payments $ - $ - $ - $ 82 $ 235 $ 348 $ 407 $ 1,792 $ 1,620 $ 1,126 $ 5,610 BALANCE SHEET Total Assets $ 100 $ 100 $ 1,648 $ 4,562 $ 7,170 $ 8,911 $ 9,987 $ 12,486 $ 14,590 $ 16,999 Short and Long Term Liabilities $ 0 $ 1 $ 1 $ 1,369 $ 2,563 $ 3,267 $ 3,552 $ 3,664 $ 3,597 $ 3,603 Shareholder Equity $ 104 $ 112 $ 1,670 $ 3,032 $ 4,221 $ 4,921 $ 5,200 $ 6,665 $ 7,777 $ 8,472 Retained Earnings $ (4) $ (13) $ (23) $ 161 $ 386 $ 724 $ 1,234 $ 2,158 $ 3,216 $ 4,924 Production and delivery rates for water at Lunar cold trap and L1 (Architecture 2, Version 4) Year Total Market Demand [MT] Market Share and Growth 0% 0% 0% 10% 20% 30% 40% 60% 80% 100% Actual Demand [MT] Number of deployed production units Non-Recurring Investments (Development) [$M] $ 4,378 $ 2,368 $ 550 $ - $ - $ - $ - $ - $ - $ - Recurring CAPital EXpenditures (Production & Launch) [$M] $ - $ - $ - $ 1,533 $ 3,013 $ 2,384 $ 1,910 $ 3,649 $ 4,105 $ 4,410 Tons Produced - Moon (MT) Tons Delivered - L1 (MT) Annualized cost/ton - Moon ($M/t) $ 3.12 $ 3.07 $ 1.62 $ 0.97 $ 1.24 $ 1.05 $ 0.90 Annualized cost/ton - L1 ($M/t) $ 6.80 $ 6.68 $ 3.53 $ 2.12 $ 2.70 $ 2.28 $ 1.96

12 Annual Production (t) Cost ($M) FY02 Cost Buildup & Production Rates Click to edit Master text styles Second level Third level Fourth level Fifth level Annual Cost Buildup (Arch 1c Version 5) 3000 Taxes 2000 Principal Payments Interest Payments 1000 CAPEX Year Annual Propellant Production Rates (Arch 1c Version 5) Tons Produced - Moon 4000 Tons Delivered - L Tons Delivered - LEO Year B. Blair SU Econ Lecture, Mtn View, CA July

13 B. Blair SU Econ Lecture, Mtn View, CA July

14 B. Blair SU Econ Lecture, Mtn View, CA July

15 B. Blair SU Econ Lecture, Mtn View, CA July

16 CSM Regolith Processor CSM Bucket Wheel Excavator CSM Regolith Processor CSM Bucket Wheel Excavator CSM Regolith Processor CSM Bucket Wheel Excavator CSM Regolith Processor CSM Bucket Wheel Excavator CSM Regolith Processor CSM Bucket Wheel Excavator Lunar ISRU Architecture Lunar Surface Deploy ISRU System at Lunar South Pole Propellant Launch Crew Arrives at Moon Refuels Lander Landing Leg And So On LLO Gateway L1 Depot Launch Infrastructure Leg Deploy Crew Lander to L1 Propellant Shipments Crew Arrives at Gateway Fuel Delivery Refuel LV Stage at L1 Crew Transitions to Return Vehicle L1 Gateway Return Leg ISRU Payload Launch Refuel LV Stage at LEO Outbound Leg LEO Earth Surface B. Blair SU Econ Lecture, Mtn View, CA July

Lands Surface Ops Lander Refueled LMO Return Leg Outbound Crew Refuel at L1 L1 Outbound Cargo XTV Refuels in Lunar Orbit Propellant

17 CSM Bucket Wheel Excavator CSM Regolith Processor CSM Bucket Wheel Excavator CSM Regolith Processor CSM Regolith Processor CSM Bucket Wheel Excavator CSM Regolith Processor Mars ISRU Architecture Mars Surface Deploy System on Mars Surface Cargo Landing Crew Lands Surface Ops Lander Refueled LMO Return Leg Outbound Crew Refuel at L1 L1 Outbound Cargo XTV Refuels in Lunar Orbit Propellant Launches Refuel at LEO LEO ISRU Payload Launch OSP Crew Launch Crew Landing Earth Surface B. Blair SU Econ Lecture, Mtn View, CA July

18 Advancing the State of the Art

19 Public Private Partnerships A rich set of public-private partnership (PPP) options are available to government. A tool is needed to help select the PPP strategy that could maximize the rate of lunar commercialization by attracting private capital into the development of critical infrastructure and robust capabilities that directly serve government needs. A successful lunar industrial development program would be good for the country, offering a path to revitalize the US economy by opening up whole new worlds of resources while increasing national employment in aerospace and other high technology sectors.

20 PPP Attribute & Feature Extraction PPP Example Exploration Partner Bond Financing Technology Maturation Operations Anchor Tenancy Demonstration Missions Feature Reduced resource uncertainty Transfer risk Pick winners Management authorities Assured customer Risk Reduction

21 The Emerging Cislunar Marketplace NASA-Science Military Missions Debris Management Satellite Servicing & Refueling International Space Station Human Exploration Space Solar Power Self-Sustaining Colonies B. Blair SU Econ Lecture, Mtn View, CA July

22 Candidate Lunar ISRU Products Volatile Resources -Water (H and O2 for life support & propellant) -Nitrogen and carbon gases (CH4 NH3) -3He Industrial / Manufacturing -Sulfur (concrete) -Soil for agriculture -Basalt fiber -Cast basalt -Iron / Steel -Aluminum -Sintered Bricks (e.g. Pavers) -Solar cells -Transparent & opaque glass (including fiber) -Shielding for L1 Gateway

23 Space Population Forecast Chapter 6 of Space Mineral Resources (Dula & Zhang)

24 Per-Capita Consumption Model Each US Child Born Will Need Source: US Minerals Management Institute

25 What Will A Space Baby Need?

On Orbit Refueling: Supporting a Robust Cislunar Space Economy

On Orbit Refueling: Supporting a Robust Cislunar Space Economy Courtesy of NASA 3 April 2017 Copyright 2014 United Launch Alliance, LLC. All Rights Reserved. Atlas V Launch History ULA s Vision: Unleashing