Creation of a U.S. Strategic Propellant Reserve

Tory Bruno
29 min readSep 7, 2022


Tory Bruno
Erica Otto, Will Clifton, Austin Schmitt, Erin Lococo,
John Sanders, John Reed, Bernard Kutter


This study proposes the creation of a Strategic Propellant Reserve using lunar-derived propellant that will drive the growth of a $3 trillion cislunar economy in the next 30 years. A U.S.-backed strategic reserve will ensure the continuation of America’s leadership in space in a time when space has become the newest warfighting domain. The ability to maneuver in space freely without the restraints of launch windows and vehicle availability, a benefit offered by such a reserve, is highly valued, particularly in case of a threat or conflict in cislunar space.

Studies have confirmed the need for space-based propellant for the large-scale crewed missions planned in the coming decades.¹ ² This report expands on the concept by recommending the U.S. government establish reserves in four key locations: low Earth orbit (LEO), near recti-linear halo orbit (NRHO), lunar surface (LS) and Mars orbit (MO). Based on the structure of the U.S. Strategic Petroleum Reserve, the proposed propellant reserve would ensure a critical amount of propellant is available in cislunar space at all times. Customers of this propellant would begin with NASA crewed lunar missions and lead to commercial activities, for instance construction of on-orbit satellites, LEO and Lagrange 5 (L5) settlements, and solar power beaming stations.

With government investment of $15 billion to $26 billion over 30 years, significant space endeavors such as crewed NASA missions, important national security operations and commercial activities receive the benefit of reduced cost and technological risk, protected assets, and existing lunar infrastructure while enabling a thriving, trillion-dollar cislunar economy by 2050.


On average, the mass of a rocket launched from Earth is 95% propellant.³ This restricts the amount of payload that can be cost effectively taken to orbit and will limit exploration efforts to the Moon and Mars. Refueling in cislunar space (similar to filling your car with gas on a road trip) allows more payload mass to launch at a lower cost.

The Lunar Crater Observation and Sensing Satellite (LCROSS) mission in 2009 verified the presence of water on the Moon,⁴ and in 2018 a group of researchers corroborated the finding and confirmed the existence of water at the surface of the permanently shadowed regions (PSR).⁵ This water ice can be broken into the building blocks of rocket fuel: liquid hydrogen (LH2) and liquid oxygen (LO2). With millions of metric tons of water estimated at the lunar poles,⁶ lunar-based propellant could support millions of years of missions.⁷

Refueling using lunar-derived propellant enables larger payloads to be delivered beyond LEO, supports larger crewed missions and lowers transportation costs. A U.S. government-backed propellant reserve will encourage the development of new industries in cislunar space and ensure these activities can continue in case of supply interruption on Earth.

As the propellant reserve stimulates the cislunar economy through readily available propellant, industries currently in their infancy will see rapid growth. Early on, the reserve will provide security to crewed lunar missions while establishing the required technology and aiding in the development of lunar infrastructure that will eventually support a variety of lunar activities.

As the mine matures, other materials such as silica and aluminum will be extracted from the lunar regolith. These will be the building blocks for small infrastructure projects at first (minor satellite structures), but eventually they will enable large settlements to be constructed, creating hundreds of jobs and allowing large-scale crewed science and tourism to take place in cislunar space. Over the next 30 years, more than 1,000 people are expected to live and work in cislunar space while the cislunar economy grows to $2.7 trillion by 2050. The timeline below illustrates the expected activities over the next three decades in a cislunar economy enhanced by a propellant reserve.

Funding Methods

The Strategic Propellant Reserve is modeled after the U.S. Strategic Petroleum Reserve to provide an innovative public resource. A public-private partnership (PPP) could create an operation and management agreement between the government and a private partner. Because of the high upfront infrastructure investment cost, this paper examines a government investment split 90% or greater with public ownership of all facilities, equipment, etc. It also assumes a private partner operates and maintains the mine and reserve and retains all operating profits.

Strategic Petroleum Reserve Precedent
The Strategic Petroleum Reserve was established in 1975 in response to the oil embargo and crisis of 1973 and 1974 and is operated by the Department of Energy (DOE).⁸ The reserve’s purpose is to maintain an emergency supply of oil in case of supply line interruption. The petroleum reserve is self-sustaining; resources can be exchanged or bartered, and storage within the reserve can be leased. This allows the reserve to be filled through in-kind premium interest, generating funds for infrastructure improvements and supporting national security in cases of emergencies.⁹ These same principles could be applied to a Strategic Propellant Reserve. A readily accessible source of propellant controlled by the U.S. and its allies would support cislunar economic expansion and aid in the protection of space assets and people.

Business Structure
Two operating structures were examined for the Strategic Propellant Reserve. The first is modeled after the Strategic Petroleum Reserve. This is done through a unique (DOE) contractual partnership called a management and operating contract (M&O): An agreement between the government and private industry/companies to operate, maintain, or support a government- owned or -controlled facility.⁹

This contract, competitively awarded, follows the Department of Energy Acquisition Regulation (DEAR) and Federal Acquisition Regulation (FAR).

The second option is a slight variation of the first, where a partnership is formalized and detailed through a PPP contract that accomplishes a similar structure of M&O without the strict regulations and requirements. One way to do this is a design-build-finance-operate-maintain (DBFOM) delivery, where an entire project is bundled so there is cohesive involvement and development by the private partner. In this structure, the government would provide most, and potentially all, of the funding. This partnership would allow the government to own the water mine, processing equipment and the reserve; private industry would operate and maintain the mine and keep operating profits. This investment split is attractive to the private sector with lowered risk and capital investment as well as the potential for high returns while enticing the public sector with high-value economic growth.

National Security Implications

Currently, the space economy is largely tied to the satellite industry,¹⁰ with more than 1,800 active satellites that support military, civil, and commercial U.S. activities on a daily basis.¹¹ Over the next 30 years, the space economy will expand to include tourism, natural resource mining, manufacturing, and cislunar activities. These industries will U.S. dependence on space systems.

The United States Space Force was created in 2019 with a mission to protect U.S. and allied interests in space. Their doctrine, released in August 2020, highlights space as a warfighting domain, “No domain in history has ever been free from the potential for war.”¹² Russia and China also view space as a new warfighting domain, and both possess their own independent launch capabilities.¹³

A U.S.-established Strategic Propellant Reserve will aid the Space Force mission in deterring aggression and mitigating losses if hostilities break out. While four reserve locations are recommended, the system should be designed in union with the national security space (NSS) community to understand system requirements. This will likely include flexibility to migrate assets in response to threats against the reserve (especially in the vulnerable LEO location). Uninterrupted propellant availability will ensure the U.S. and its allies are able to continue to carry out any required missions successfully. This will aid in the creation of a robust cislunar economy and continue to support U.S. diplomatic power that is strengthened by perceived dominance in space.

Geopolitical Interest

The goal for the U.S. and allied space-faring countries should first focus on establishing a long-term presence in space. Being the first to develop and install a lunar propellant mine puts a country or group of nations in advantage to establish official space rules, laws, and regulations. If the U.S. were to lead the development of legal framework in space, the country could cultivate cooperation and healthy competition that would benefit all participants in the space economy.

Importance of Space Superiority
It’s crucial for the U.S. and allied nations to maintain space superiority through establishing a long-term presence in space before other countries. Air Force Space Command notes, “Space is a major engine of national political, economic, and military power for whichever nation(s) best organizes and operates to exploit the potential.”¹⁴ Even though there are laws and regulations in place, including the Outer Space Treaty of 1967, Moon Treaty and U.S. Commercial Space Competitiveness Act, there are still current geopolitical indifferences that constrain international space rules and regulations. Nayef Al-Rodhan, a geostrategist, said it best: “The tendency is to militarize space to develop counter attacks or further outer space exploration as an isolate of sole national strategy.”¹⁵ Weaponizing and militarizing space to enhance power will only diminish political solidarity and peace on Earth. Our current space goal isn’t a military race to gain ground, build strength, and protect national security, but a geopolitical endeavor that solves those through cooperation, respect and understanding.

Future of Space Shaped by U.S.
The Space Futures 2060 Workshop hosted by Air Force Space Command examined the implications of a variety of space futures with either the U.S. or an adversarial country. Their conclusions are summarized as follows. A U.S.-organized and -controlled space environment would support a “free domain under a rules based, international order with established norms of behavior that promotes philosophy of open trade, free access, and space commons for all humanity.”14 A free domain accepted and followed by a diverse range of allied nations will lead to a fortified political structure, resulting in a robust space market and political stability The United Launch Alliance (ULA) CisLunar-1000 vision of thousands of people living and working in cislunar space in just a few decades is very possible if the U.S. implements the space rules and order.

An adversarial country with competing interests could devastate the order and expansion of space, particularly for the U.S. and allied countries. An adversary might promote norms of behaviors, rules and laws for space that serves its self-interest. Self-interest could create incentives to avoid alliances and take advantage of less established nations/entities to impact their position of power. Additionally, non-competitive practices could be used to maintain positions of power that benefit adversaries’ own well-being.

How U.S. Must Proceed
There are a few actions that the U.S. must embrace to establish this free domain space order and a healthy space economy. To improve the knowledge, access, and livability in space, the U.S. must continue to invest in space science and technology.14 Investing in an Strategic Propellant Reserve will help the U.S. create a sustainable lunar presence and provide a valuable transportation resource. A U.S.-led water mine will enable a long-term and influential presence in space, allowing the U.S. to lead in developing rules-based, democratic space order. Finally, developing a military force that can defend this international space order is essential. The Department of Defense (DoD) needs to be an integral partner to support and protect this space initiative. Military strength shouldn’t be the overwhelming characteristic to space order, but must be implemented to deter hostiles and threats if they are to occur.

Legal Framework

Existing Legislation
The United Nations ratified the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies (Outer Space Treaty) in 1967.¹⁶ This treaty established a framework for the peaceful utilization of space resources where “outer space, including the Moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty.” The Outer Space Treaty is ambiguous on several issues, and some interpret it to mean that resources cannot be extracted for commercial uses. The Agreement Governing the Activities of States on the Moon and Other Celestial Bodies (Moon Treaty) adopted in 1984 takes this one step further by declaring space resources the “province of all mankind.”¹⁷ While the treaty has not been ratified by the U.S. or any other space-faring nation, it could still be a barrier to commercial resource extraction. Today, these treaties are the largest works of international space law.

In 2015, the U.S. Commercial Space Launch Competitiveness Act established ownership of extracted space resources without asserting U.S. sovereignty or exclusive rights of any celestial bodies.¹⁸ Luxembourg also has a domestic law that not only recognizes private ownership of space resources, but also establishes a legal pathway for authorization to mine them.¹⁹ However, neither of these domestic laws have been tested since they were established. In September 2020, NASA released a request for quotations (RFQ) for 50–100 grams of lunar regolith to be collected by a commercial company. According to former NASA Administrator Jim Bridenstine, the goal of this exercise is to demonstrate that lunar resources can be purchased in a way that is compliant with the Outer Space Treaty.²⁰

Hague Building Blocks
In order for a Strategic Propellant Reserve to be established successfully, clear international laws must be adopted. The Hague Building Blocks are a set of recommendations put forth by the Hague International Space Resources Governance Working Group as a foundation for international space resource legislation. Key principles emphasized in the building blocks include:

  • International responsibility for space resource activities
  • Jurisdiction and control over space made products used in space resource
  • Priority rights
  • Resource rights
  • Due regard for corresponding interests of all countries and humankind
  • Technical standards for, prior review of, and safety zones around space resource activities
  • Monitoring and redressing harmful impacts resulting from space resource activities
  • Sharing benefits arising out of the utilization of space resources
  • Registration and sharing of information
  • Provision of assistance in case of distress
  • Liability in case of damage resulting from space resource activities
  • Visits relating to space resource activities
  • Institutional arrangementsSettlement of disputes
  • Monitoring and review²¹

These concepts should be considered by domestic and international bodies looking to formulate new regulations on space resources. Overall, consistent, international policy is necessary to protect the rights of those looking to utilize lunar resources.

Technical Requirements

The baseline mining technique assumed in this study is one outlined in the 2019 paper “Ice Mining in the Lunar Permanently Shadowed Regions,” where water would be mined from the Moon’s PSRs.²² In this method, sunlight is reflected into the crater to heat the surface and sublimate the ice. The water vapor is then captured onto mobile cold traps. It is assumed that this process would be performed autonomously or from Earth. While this is one concept out of many, changing the mining technique would have a limited impact on the outcome of this study. As part of the analysis, the number of sublimation tents required was calculated while varying demand and assuming each tented could produce 1,600 MT of ice per year.²³ It was determined that anywhere from 1 to 12 tents would be required to support demand throughout the 30-year period of study.

Once extracted, the water would be stored in its liquid state until needed. Propellant processing (through electrolysis) would take place at each reserve location due to the difficulty of storing cryogenic (super cold) fluids. Current electrolysis methods are slow and inefficient, so new technology may need to be developed in order to keep up with demand. In this architecture, there would be liquid water storage and processing at each of the four reserve locations: LEO, NRHO, LS and MO.

Required Reserve Size and Locations

Similar to the Strategic Petroleum Reserve today, a minimum level of propellant will be continuously held at each location in case of supply interruption. To ensure the propellant is quickly available, reserves will be located in four different areas and serve various customer groups. The first, located on the lunar surface near the propellant mine, will serve customers on the surface.

The second, located at NRHO, will make propellant available for high-ground customers, including operations between Earth and the Moon and deep space mission fueling. The third reserve will orbit the Earth in LEO, available for use by Earth-launched spacecraft for refueling, as well as orbital missions such as satellite maintenance. The final reserve will orbit Mars, holding enough propellant for a return trip to Earth in case of crew emergency. These four locations will serve as the nominal operation access points, and the system should also be designed flexibly to allow propellant usage in other orbits if necessary.

The primary variable in determining the size of these reserves is the volume of critical reserve. This volume represents the minimum level of propellant constantly maintained for use in case of a supply interruption. The goal of the reserve is to preserve human safety and economic activity in case of emergency. Several models of this critical reserve were considered based on two different classifications of demand: critical and essential.

The missions denoted as critical are vital to humanity and the nation. In each critical reserve model, the critical demand is allocated two years’ worth of supply in the critical reserve, as re-establishing supply lines from a complete mine failure could take up to two years. The essential demand was then included with varying time intervals (ranging from zero to five years). The customers have been categorized as essential or critical as shown below.

The recommended critical reserve model is two years of critical demand and one year of essential demand. This provides a pool of propellant to be used until supply lines can be re-established, either from the lunar ice mines or from Earth, in case of supply interruption. The number of propellant supply trips to maintain required fuel levels is reasonable, ranging from 12 in the first decade to 176 in the third decade.

After selecting required reserves of two years for critical demand and one year for essential demand, the sizes of the reserves were estimated. The projected demand, transportation ratios and reserve requirements were analyzed to understand the required supply of liquid water from the lunar ice mine. These supply figures, along with the original demand figures, were translated into individual supply and demand events and scheduled over the examined period of thirty years. Total system size, annual supply trips, and mining requirements are provided below. Projected propellant demand is detailed in the “Potential Markets” section.

Strategic Propellant Reserve Development

Development of the lunar mine and propellant reserves is projected to take place over eight years. This includes prospecting, assembly, testing and delivery — all of which must happen before the mine can become fully functional. For the delivery and establishment of the mining, processing and storage equipment there will be a large amount of lift and landing requirements. Thus, the propellant reserve is assumed to become operational in 2028. A high-level timeline of the development of mining infrastructure is provided below.

  • 2023 Prospecting and Sampling (NASA VIPER)
  • 2023–2024 Detailed Feasibility Studies
  • 2024–2026 Mining Robotics Development
  • 2026–2027 Mining Robotics Delivery and Establishment
  • 2028 Mining, Processing and Storage Begin

Infrastructure Emplacement

Previous sections discussed the technical equipment used for ice mining, size of reserves needed and number of thermal tents needed in the future. Between 2026 and 2028, there will need to be periodic equipment deliveries to begin the development of the Strategic Propellant Reserve. The below table shows the estimated weight of the necessary equipment as estimated in Sowers and Dreyer, 2019.²⁴

Mine Establishment (2026–2027)
Delivery of mining equipment to the lunar surface will require deliveries by super heavy lift launch vehicles (SHLLV). The final deliveries of mine infrastructure will include a final prospecting robot (500 kg), utility robotics (53 kg x 40) and all of the ice mining equipment above (29,000 kg) and would require a SHLLV to place a multi-sectional payload in space. Several medium launch vehicles (MLV) will be needed to deliver cargo lunar landers to transport the equipment to the lunar surface. After the mine equipment is operational on the lunar surface, another round of SHLLV and MLV launches also will be needed for replacements and to position equipment, including tanks for storage, power sources, thermal tents and additional robotics.

Mine Maintenance and Sustained Presence (2028 — Beyond)
After 2028, the cislunar economy and the Strategic Propellant Reserve will grow and expand in parallel. As propellant demand increases from 480 MT per year in 2030 to 3,600 MT per year by 2050, additional mining equipment will be necessary. Twelve thermal capture tents are estimated to be required in 2050, with all mining equipment requirements growing along the same trend. Further SHLLV launches will be required to support the growing mine infrastructure.

Potential Markets

Projected Demand
Inexpensive propellant made readily available by the Strategic Propellant Reserve will attract customers from civil, military and private sectors. Forecast demand for the next 30 years uses a combination of publicly available data and conversations with industry experts. Each customer is assumed to purchase propellant from one of the reserves in either LEO, NRHO, LS or MO. Demand was examined at 10-year intervals and categorized into two major categories: government and commercial. Government demand is further broken out into civil and military.

The Mars reserve is unique as it only serves as a safety net for emergency crew events and does not include active capacity for commercial sales. This study assumes that commercial activity does not expand enough to require an active component to Mars reserve within the 30-year time horizon. However, the infrastructure set up by the Strategic Propellant Reserve in MO would encourage commercial activities, and the reserve could expand to include commercial sales if required.

U.S. Government Demand
Civil Demand
The civil demand comprises NASA and other science missions such as crewed lunar landers, lunar surface mobility activities, Mars missions and Mars reserve capacity. The lunar lander demand is based on current human landing system (HLS) predictions, which estimate 25 MT of fuel for a round-trip flight from the lunar surface to NRHO.²⁵

Lunar surface mobility comes in the form of 2 2-MT hoppers in the first decade, 5 in the second decade and 10 in the third. In the first decade, the hoppers are utilized more frequently to support exploration efforts and therefore require more propellant annually. Mars missions are predicted to begin in 2035 and continue approximately every other year with a demand of 280 MT each, fueled at NRHO.²⁶ The Mars reserve maintains capability for emergency crew return trips at any time. The resulting demand based on these missions is summarized in the table below.

Military Demand
Military demand encompasses NSS mobility, satellite manufacturing and satellite servicing. NSS mobility is comprised of ships, each with a 4-MT fuel tank, that can move around cislunar high ground for a variety of classified reasons. Eight of these ships are estimated in the second decade, growing to 17 in the third. The military will likely desire to build satellites on-orbit in LEO starting in the second decade, each of which can be constructed from partially lunar sourced materials, about 0.5 MT per satellite. Beginning at one satellite per year, the demand is expected to grow to 10 per year in the third decade. Satellite servicing begins in the second decade via servicing tugs. These small ships will have 8-MT fuel tanks, with one operating in the second decade and two in the third. The demand based on these missions is summarized in the table below.

The total U.S. government (USG) demand outlined below includes the military and civil demand listed above for a total propellant demand of 284 MT per year in the third period.

Commercial Demand
Commercial demand is the most varied and vast category. Commercial lunar landers are modeled at one per year in the second decade, increasing to four per year in the third. Commercial launches from Earth could refuel in LEO at a lower price than bringing propellant from Earth. Centaur vehicles with 21-MT tanks will be used, with 10 per year over the second and third decades.
Additionally, four large space settlements will be put in place in order to house people living and working in space. Beginning in the second decade, a settlement with capacity for 250 people will be established roughly every 5 years, first in LEO, then in a high ground point such as L5, for a total of four settlements by the end of the 30-year study. The people living in these settlements will, of course, require air and water, which can be lunar-sourced. The expected mass for this upkeep is approximately 270 MT per year in the third decade.

The largest infrastructure project will be the solar power beaming stations that develop in the third decade. These large stations will collect energy through massive solar arrays, then beam it to Earth through advanced energy transfer. They are estimated to weigh 10,000 MT.27 Two, each developed over a five-year period, will be put in place in the third decade. This generates a need for the movement of 2,000 MT of lunar-derived materials per year in the third decade.

Asteroid mining missions are projected to begin in the third decade, with an annual demand of 100 MT refueled in NRHO. The resulting demand based on these missions is summarized in the table below:

Financial Analysis

Approach to Financial Analysis and Business Case
In order to project financial metrics and performance of the Strategic Propellant Reserve, it was determined that a discounted cash flow (DCF) model was the most appropriate method. A DCF allows the estimation of the enterprise net present value (NPV) over the course of the 30-year time horizon. In addition to the DCF model, an appropriate profit level indicator (PLI) was identified to contextualize the amount of annual projected return the project can generate.

Return on capital employed (ROCE) was determined to be the most appropriate PLI. ROCE represents a pre-tax measurement of profitability defined as earnings before interest and tax (EBIT) divided by amount of capital used in the project. To determine profitability, propellant pricing was determined using a cost build-up approach by assigning a margin on total costs (MOTC). The MOTC pricing approach was identified as the most appropriate method because it allows for prices to be shown across a range of percentage values, including negative margins in the case of subsidized sales.

Modeling Assumptions
In order to forecast the performance of the Strategic Propellant Reserve, the following modeling assumptions were made to make reasonable and conservative estimates:

Market Pricing
To assess cost savings derived from the Strategic Propellant Reserve, a comparison was made between the forecast costs of lunar derived propellant to the anticipated future market pricing of propellant by location. To forecast future market prices of propellant, current market prices were utilized and discounted on a uniform interval of 10 years. At the end of each pricing interval, market prices were discounted to 75% of their prior value. This discount value conservatively estimates the anticipated future cost savings derived from industry innovation and identification of future best practices.

Incremental Learning Factor
An incremental annual learning factor of 3% was utilized in the model to represent iterative cost savings derived from operating the Strategic Propellant Reserve. These cost savings could manifest in the form of process improvement, identification of best practices, innovation or benefits from economies of scale.

Weighted Average Cost of Capital (WACC)
A WACC of 12% was determined to be an appropriate discount factor given the risk profile of the Strategic Propellant Reserve. According to NYU Stern, the aerospace/defense industry has an average cost of capital of 7.18%.²⁸ As a result, it was determined that a WACC of 12% conservatively encompassed the additional risks of the Strategic Propellant Reserve given the novel nature and unique risks associated with this project.

Estimated Useful Life and Depreciation Assumptions
In order to estimate depreciation expenses related to the Strategic Propellant Reserve, an estimated useful life of 10 years was utilized for all fixed assets related to the project. Capitalized property related to the gathering of water are allowed 25-year estimated useful lives from the IRS.²⁹ Given the unique environmental conditions, such as the lunar regolith, that the fixed assets will be exposed to, the useful life was shortened to 10 years.

In addition to estimating the useful life of the fixed assets, a residual value was also assigned to the capitalized assets. The residual value, or salvage value, was estimated to be approximately 12% of the overall capital expenditure (CAPEX). This number reflects the portion of the Strategic Propellant Reserve that can be re purposed or retrofitted to the next iteration of capital assets.

Propellant Production Cost Assumption
The projected cost of propellant production on the lunar surface is baselined at $500k/MT produced. A Colorado School of Mines business case analysis determined propellant can be produced at this level and is economically feasible in the future. This study assumes that is achievable through technology advances in the next 10 years.³⁰

Transportation and Integration Cost Assumption
Transportation costs were determined based on the final destination of the propellant. Transportation costs were projected as follows:

  • LS: 0 MT consumed;
  • NRHO / MO: 1 MT consumed/ 1 MT delivered; and,
  • LEO: 8 MT consumed/ 1 MT delivered.

In addition to propellant consumption, integration costs were also a consideration when projecting transportation costs to NRHO and LEO destinations. Integration costs were baselined at $200k/MT and encompasses the costs incurred while prepping payload for transport.

Development Period
The non-operating development period for the project is defined as the first eight years in the model. Eight years represents the time needed to adequately prospect, develop and build the Strategic Propellant Reserve and is in line with the anticipated timeline of events.³¹

Ownership Structure
The ownership structure of the Strategic Propellant Reserve resembles a PPP with a private stake between 0–10% and a USG interest between 90–100%. The private interest would be responsible for its pro-rata share of capital expenditures, operating losses, and would be entitled to any operating income derived from the Strategic Propellant Reserve.

Terminal Growth Factor
The terminal growth factor (g) used in the DCF was 3%. Given the dynamic nature of the space economy, a conservative g of 3% represents the gradual growth of a maturing space economy in the years beyond the model’s time horizon. The NPV of the terminal value is <25% of all present cash flows.

Total Commitment Required
The approach used to determine the amount of capital required to develop the Strategic Propellant Reserve was the analysis of the enterprise’s cumulative free cash flows (CFCF). CFCF is calculated by adding all of the cash flows from the inception of a company or project. During the 30-year operating cycle of the Strategic Propellant Reserve, the lowest value of CFCF represents the point in time where the most amount of capital is deployed. This value approximates the total commitment required to develop a project. Below is a parametric analysis of the amount of USG capital required as a function of both private ownership structure and pricing margins:

The blue-shaded region represents a range of scenarios identified by their perceived probability of occurrence. An approximate range of commitment between $13.1B and $22.9B for lunar deployment plus an additional $2–3B for the MO deployment is the projected USG capital required over a 30-year period to fund this project. Additionally, the largest forecasted amount of capital deployed in one year is approximately $5B.

Negative MOTC scenarios are shown to illustrate the commitment impacts related to the decision to offer subsidized propellant to commercial customers below projected cost. The 0% private ownership scenarios also highlight the cost difference between a PPP ownership structure to a fully USG-led ownership structure.

ROCE Analysis
The below table is a parametric analysis of the average annualized ROCE of a private stakeholder in the Strategic Propellant Reserve as a function of price and ownership percentage using a constant WACC of 12%:

An ROCE range between 4.1% and 11.2% average annual return was identified. It was concluded that in certain ownership and pricing structures, there is potentially sufficient return for a private stakeholder at a 12% discount rate.

Economic Analysis

Approach to Economic Analysis
In order to project economic growth and savings derived from the use of the Strategic Propellant Reserve, two primary sources of economic growth were identified:

  1. Growth derived from CAPEX; and
  2. Growth derived from cost savings passed on to customers.

The following two sections illustrate the methods used to estimate growth stemming from these sources. The sum of the economic activity identified from both of these sources represents the estimated economic growth of the Strategic Propellant Reserve in this analysis.

Method to Model Growth Derived from CAPEX
The process of building capital projects creates economic growth and activity. According to the Space Foundation, more than 60% of the economic growth derived from NASA’s budget is related to tertiary commercial goods and services that benefited from the space industry.32 In 2005, these activities generated more than eight times NASA’s annual budget.33 As a result, one component of the economic analysis was to capture the multiplier economic impact the CAPEX of the Strategic Propellant Reserve will have on the greater cislunar economy. It was determined that a multiplier of 1.5x CAPEX would be a conservative baseline figure to approximate the economic impact of the propellant reserve’s CAPEX spend.

Method to Model Growth Derived from Cost Savings
The primary source of economic growth identified in this analysis is the growth derived from the cost savings of propellant purchased by customers. To determine the quantity of cost savings, projected market rates of propellant by location were compared to projected Strategic Propellant Reserve prices. Prices of the Strategic Propellant Reserve were displayed in a range between -20% and 20% MOTC when compared to market rates. The calculated difference between the market rate and the projected Strategic Propellant Reserve price is identified as the cost savings.

These cost savings passed onto the customer represent a direct financial benefit that customers of the Strategic Propellant Reserve receive. To quantify the amount of savings reinvested into the space economy, a conservative plowback ratio of 95% was utilized. The reinvested quantity of savings is then compounded annually based on a return on assets (ROA) spread between 12%-16%. According to CSI Market, the aerospace and defense industry demonstrated an ROA range between 3%-17% in 2019, serving as a benchmark for the ROA range utilized.34 The cumulative compound growth of these savings during the 30-year time-horizon represents the amount of projected economic growth derived from the Strategic Propellant Reserve’s cost savings.

Economic Analysis Results
Economic Growth as a Function of Price and ROA

The below table illustrates the projected economic growth ($B) derived from the Strategic Propellant Reserve based on a range of pricing and ROA parameters:

The blue-shaded region represents a range of scenarios identified by their perceived probability of occurrence and as specified above. Within this region, a range between $454B and $631B of economic growth derived from the Strategic Propellant Reserve was estimated over the 30-year time horizon of the project.

Economic Growth per USG Dollar Committed
The below tables illustrate the projected economic impact for every USG dollar committed to the Strategic Propellant Reserve holding a 100% USG ownership structure constant:

The blue-shaded region represents a range of scenarios identified by their perceived probability of occurrence. Within this region, a range between $24.6 and $39.4 of growth per USG dollar committed was identified for the lunar component of the project. Both the 97.5% and 95% USG ownership structure tables are also presented in Appendix A and their respective ranges for lunar deployments.


The establishment of a Strategic Propellant Reserve will support customers from civil, military and commercial sectors that will become pillars of the space economy. Ensuring lunar derived propellant is consistently available will allow safe exploration past LEO, provide cost effective in-space transportation and encourage a variety of commercial space activities. By providing the startup capital for a lunar mine and discounting the cost of lunar based propellant, the USG would accelerate the growth of the cislunar economy.

This study recommends the reserve operates through a PPP where the private side takes on little risk and the public side provides capital expenditures in exchange for dramatic economic growth and an innovative new tool for national security operations. The Strategic Propellant Reserve will ensure the United States holds on to its position of preeminence allowing to lead the development of the legal frameworks of space and guide the growth of the cislunar economy.

The thermal mining concept suggested here is scalable enough to meet demand throughout the life of the reserve but requires continued focus to be ready for an operational mine in 2028. Stored propellant for two years of demand for all critical missions is recommended to protect the U.S. against supply interruptions. Propellant will be stored in reserves at the lunar surface, NRHO, LEO and Mars orbit.

An analysis of the mine and reserve business case determined it is possible for a private investor to generate an ROCE of 4.1% to 11.2%. Throughout the 30-year period of study, a USG investment of $15B to $26B is required. This investment will ensure propellant is available at a reduced cost to a variety of activities in cislunar space. The cost savings provided to reserve customers by discounting propellant are then reinvested and amount to $400B to $600B in economic growth. This is a return of $24.6 to $39 per dollar spent by the USG on the reserve. The Strategic Propellant Reserve represents an opportunity for the USG to ensure its continued dominance in space, provide a safety net for cislunar crewed activities and encourage growth of the entire cislunar economy.

Next Steps

Strategic Propellant Reserve proposed in this study will require collaborative efforts from the greater space community and beyond. Additional input from industry experts, policy makers, researchers, private industry is required to refine the analysis provided. We recommend the American Institute of Aeronautics and Astronautics (AIAA), as the leading technical society for space, pull together industry, academia, NASA and NSS representatives to build a task force to move the concepts forward.

Creation of the envisioned Strategic Propellant Reserve requires collaboration and engagement from a wide range of stakeholders shaping humanities future in space. No one individual, organization or agency will successfully navigate this path alone. Even incremental evolution will be best served through teamwork. Thus ULA has collaborated with Dynetics, et. al, on their vision for a cislunar propellant depot.

This framework transforms the Artemis mission from aggregating single flights to the Moon to a sustainable architecture leveraging reusable infrastructure. This evolution could be the next increment in propellant infrastructure enabling a future Strategic Propellant Reserve.

To ensure the Artemis missions provide a sustainable lunar architecture for propellant infrastructure, ULA and Dynetics are proposing that AIAA establish forums and standards for the research, development and evolution of a cislunar propellant depot. The first step should be the creation of a small multidisciplinary team representing the relevant technology, policy, standards and integration committees. This team will build upon the Dynetics and ULA visions to develop a framework for engagement with the broader community. This effort will provide a vehicle for gathering stakeholders, focusing the space community on the unique research and development challenges, evolve standards and policies, and move the community as a whole one step closer to the future enabled by the Strategic Propellant Reserve.

Appendix A

¹Lockheed Martin. “Mars Base Camp, Updates and New Concepts”. September 2017.
² Kutter, Bernard, Frank Zegler, Gary O’Neil, and Brian Pitchford. “A Practical, Affordable Cryogenic Propellant Depot Based on ULA’s Flight Experience”. September 2008.
³ Pettit, Don. “The Tyranny of the Rocket Equation.” May 1, 2012. Available:
⁴ NASA. “LCROSS Overview”. Accessed: September 10, 2020. Available:
⁵ Shuai Li, Paul G. Lucey, Ralph E. Milliken, Paul O. Hayne, Elizabeth Fisher, Jean-Pierre Williams,Dana M. Hurley, and Richard C. Elphic. “Direct evidence of surface exposed water ice in the lunar polar regions”. September 4, 2018.
⁶ Rubanenko, Lior. Jaahnavee Venkatraman And David A. Paige.”Thick ice deposits in shallowsimple craters on the Moon and Mercury”. October 25, 2019.
⁸ Office of Fossil Fuels. “SPR Quick Facts & FAQs”. May 11, 2020.
⁹ Office of Fossil Fuels. “Discussion of the Origin, Characteristics, and Significance of the Department of Energy’s Management and Operating (M&O) Form of Contract. October 2007.
⁹ Office of Fossil Fuels. “Discussion of the Origin, Characteristics, and Significance of the Department of Energy’s Management and Operating (M&O) Form of Contract. October 2007.
¹⁰ Satellite Industry Association. “State of the Satellite Industry Report”. May 2019
¹¹ Defense Intelligence Agency. “Challenges to Security in Space”. January 2019.
¹² Headquarters United States Space Force. “Space Capstone Publication, Spacepower”. June 2020.
¹³ Defense Intelligence Agency. “Challenges to Security in Space”. January 2019.
¹⁴ Air Force Space Command. “The Future of Space 2060 & Implications for U.S. Strategy: Report on the Space Futures Workshop. September 5, 2019.
¹⁵ Nayef Al-Rodhan. “The Future of Meta-Geopolitical Competition in Outer Space”. July 20, 2019.
¹⁶ United Nations Office for Outer Space Affairs. “Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies”. Accessed September 2, 2020. Available:
¹⁷ United Nations Office for Outer Space Affairs. “Agreement Governing the Activities of States on the Moon and Other Celestial Bodies”. Accessed September 2, 2020. Available: https:/
¹⁸ “H.R.2262 — U.S. commercial Space Launch Competitiveness Act”. November 10, 2015.
¹⁹ Luxembourg Space Agency. ”Legal Framework”. Accessed September 11, 2020. Available:
²⁰ Foust, Jeff. “NASA offers to buy lunar samples to set space resources precedent”. Accessed September 11, 2020. Available:
²¹ Hague International Space Resources Governance Working Group. “Building Blocks for theDevelopment of an International Framework on Space Resource Activities”. November 13, 2019.
²² Sowers, George F. and Christopher Dreyer. “Ice Mining in Lunar Permanently Shadowed Regions. December 16, 2019
²³ Sowers, George F. and Christopher Dreyer. “Ice Mining in Lunar Permanently Shadowed Regions. December 16, 2019
²⁴ Sowers, George F. and Christopher Dreyer. “Ice Mining in Lunar Permanently Shadowed Regions”. December 16, 2019
²⁵ Kornuta, David et al. “Commercial Lunar Propellant Architecture”. March 2019.
²⁶ T. Cichan, S. Bailey, T. Antonelli, S. Jolly, R. Chambers, B. Clark and S. Ramm, “Mars Base Camp: An Architecture for Sending Humans to Mars.” December 1, 2017.
²⁷ Sasaki, Susumu. “It’s always sunny in space”. May 1, 2014
²⁸ Damodaran, Aswath. New York University. “Cost of Capital by Sector (US),” Accessed August 17, 2020.
²⁹ IRS. “Figuring Depreciation Under MACRS,” Accessed August 17, 2020.
³⁰ Sowers, George F. and Christopher Dreyer. “Ice Mining in Lunar Permanently Shadowed Regions”. December 16, 2019
³¹ See prior “Potential Markets” section for timeline
³² NASA. “NASA Administrator Griffin Discusses Value of the Space Economy,” Accessed August 19, 2020.
³³ Ibid.
³⁴ CSIMarket. “Aerospace and Defense Industry,” Accessed August 19, 2020



Tory Bruno

Tory Bruno is the CEO of United Launch Alliance (ULA), a competitive powerhouse that is shaping the future of space launch.