Zenit rocket lifts off from Odyssey platform. Image credit: Sea Launch

Aug 5, 2015 Sea Launch faces perfect storm

Sen—One of the most daring ventures of the space sector, the Sea Launch company, is battling for survival in the competitive launch market. Formed in mid-1990s by the private industry from four countries, Sea Launch burst into the field of commercial space launches by firing rockets from the middle of the ocean.

Sea Launch banked on getting the competitive edge thanks to its ability to literally ship its launch site and all its personnel to Equatorial regions of the planet. When launched along the Equator, the rocket needs a minimum energy to insert commercial communications satellites into the hard-to-reach geostationary orbit 36,000 kilometers above the planet. As a result, the company hoped to offer customers maximum payload at a minimum price.

To implement the idea, a Norwegian company Kvaerner converted a self-propelled oil rig dubbed Odyssey into a floating launch pad. A second vessel, christened the Sea Launch commander, was outfitted with a mission control and an in-door deck for rocket processing. Russia's RKK Energia provided a Block DM-SL third stage for the Ukrainian-built Zenit rocket, while the Boeing company helped to arrange funding and a home port for the Sea Launch fleet in Long Beach, California.

The multinational venture opened for business in 1999 and quickly became one of big three commercial carriers to the geostationary orbit, along with the Russian Proton and the European Ariane-5 rockets.

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A fireball from a failed Zenit rocket engulfs the Sea Launch platform on Jan. 30, 2007. The vessel sustained only minor damage, thanks to its durable design. Image credit: Sea Launch

However, after several successful years, Sea Launch faced an uphill battle matching debit and credit. A spectacular explosion of the Zenit on the deck of the Sea Launch platform in January 2007 triggered an exodus of customers, forcing the owners to file for bankruptcy on June 22, 2009. At the time, Sea Launch listed assets of up to $500 million against liabilities exceeding $1 billion.

Around the same time, Boeing, an original majority stake holder in Sea Launch, abandoned the venture. Moreover, Boeing reportedly asked Sea Launch to repay $500 million. RKK Energia apparently paid only $155 million, leading to a lawsuit by Boeing alleging RKK Energia owed it $222.3 million and KB Yuzhnoe another $133.4 million.

Sea Launch spent several years emerging from bankruptcy under the ownership of RKK Energia in Russia. Missions from the ocean-based platform resumed in 2008, however after 10 successful launches, on Jan. 31, 2013, another Zenit plunged into the ocean shortly after liftoff. The smoke had hardly cleared from the ill-fated mission, as reports surfaced in Russia that the leadership at RKK Energia had asked the government to take over the troubled venture.

By that time, Sea Launch owed from $300 to $530 million to its creditors, according to various sources. By its own estimates, Sea Launch needed to perform at least four launches a year to break even, however, in reality, it could not win more than two or three customers a year.

If all of this looked bad enough, the worst was yet to come. Despite a successful return to flight on May 26, 2014, an unsurmountable combination of tough competition and deadly geopolitics forced Sea Launch to cease operations until at least 2016. On the economic side, the emergence of SpaceX in the U.S. took away a considerable share of customers, which Sea Launch would havehoped to court. A potentially fatal blow came after the Zenit rocket had fallen victim of the Russian-Ukrainian conflict, essentially leaving the company without a launcher.

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A Zenit rocket in launch position on the Sea Launch platform. Credit: Sea Launch

Yet, despite such a seemingly impossible situation, Serguei Gugkaev, who became the CEO of Sea Launch in 2012, told Sen that the company was still looking for ways to jump-start its operations.

According to Gugkaev several factors had worked in favor of the company recently, easing its financial burden and somewhat brightening prospects for the recovery. First of all, the drop in oil prices made potential Sea Launch operations cheaper. Secondly, a huge fall of the Russian ruble and the Ukrainian grivna relative to other currencies suddenly gave Sea Launch a 20 per cent discount on all purchases of equipment and hiring of the personnel, which Sea Launch makes in dollars mostly in Russia and Ukraine.

Gugkaev emphasisedthat Sea Launch still retains its inherent advantages in the market, such as the highly automated launch process, which requires only 250 to300 members of the personnel for the launch campaign, while thousands of workers normally support traditional launch sites.

However, Sea Launch still has serious hurdles to overcome. With the financial bailout from the Russian government not forthcoming, Sea Launch looked at various international suitors and investors around the world, including those among emerging space powers like Brazil and China. However none of them had materialized so far and many observers see such a marriage as far-fetched due to a maze of political and financial problems to resolve.

The company also explored wether it was possible to replace the Zenit with another launcher. Previously, Lockheed Martin's Atlas rocket was considered as a perfect fit for the Sea Launch platform, but again, politics and economics made such a replacement unlikely.

Gugkaev was also skeptical about the latest proposal from GKNPTs Khrunichev in Moscow to adapt its yet-to-be-built Angara-3 rocket, which was loudly advertised in the Russian press.

"Anything can be adapted, but it will require a very large number of upgrades," Gugkaev said.

Very preliminary attempts to fit the Angara-3 with Sea Launch vessels immediately revealed the need for costly modifications on both the rocket and on the launch platform, in particular, because of drastically different fueling systems. Therefore, overly optimistic claims that Angara-3 could be easily created by removing two out of four boosters from the existing Angara-5 rocket would not work for Sea Launch. Moreover, the architecture of Angara-3 with its two strap-on boosters, makes it highly incompatible with the handling equipment of the single-body and compact Zenit, which had made the Ukrainian rocket an ideal candidate for the Sea Launch in the first place.

Gugkaev explained the Russian proposal by an attempt of GKNPTs Khrunichev, to employ the Angara-3 variant, which so far, had not found any passengers within the Russian space program.

Read more on the hopes and challenges facing Sea Launch in the second part of the series next week.

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