SAN FRANCISCO — NASA’s plans to demonstrate on-orbit satellite refueling and to encourage U.S. companies to enter that business is causing serious concern at MacDonald, Dettwiler and Associates (MDA), the Canadian company that announced plans in March to build its own spacecraft servicing vehicle.

Under contract with the Canadian Space Agency, MDA built the Special Purpose Dexterous Manipulator, the international space station’s two-armed robot that is expected to play an integral role in NASA’s effort to demonstrate satellite repair and refueling. Engineers at NASA Goddard Spaceflight Center built special tools for the MDA robot to enable controllers on the ground to use it in the Robotic Refueling Mission (RRM), a series of repair and refueling exercises scheduled to begin later this year and continue for approximately two years. A mock spacecraft and the robotic tools are set to travel to the space station on the final space shuttle flight scheduled for July 8.

RRM is the first phase in a comprehensive NASA plan to develop the expertise needed to perform on-orbit spacecraft repair and refueling and to bring U.S. companies into what some NASA and industry officials see as an extremely promising but very challenging future market.

At the same time, MDA is preparing to launch its own satellite-servicing business with a spacecraft in geosynchronous orbit. In March, Intelsat S.A. of Luxembourg and Washington, one of the world’s largest satellite fleet operators, announced plans to pay MDA more than $280 million to repair and refuel satellites in orbit. As part of that deal, Intelsat subsidiary, Intelsat General Corp., plans to solicit U.S. government business for the satellite servicing venture.

In a June 21 article in The Globe and Mail, Canada’s largest national newspaper, Intelsat and MDA officials cite NASA’s plans to develop satellite-servicing capabilities as a serious threat to the MDA-Intelsat venture. Intelsat spokeswoman Nancy Nolte referred questions about the satellite repair and refueling business to MDA. MDA officials declined to comment for this story but confirmed that Steve Oldham, president of MDA’s satellite servicing business, told The Globe and Mail, that any NASA-backed satellite servicing venture would pose “very challenging competition” for MDA. One key element of MDA’s business plan is to obtain work refueling U.S. government spacecraft, according to The Globe and Mail article.

NASA officials said that they have no intention of developing a satellite refueling business to compete with private industry. “NASA managers have met with officials from MDA and Intelsat, who understand that NASA plans to take the RRM hardware to the International Space Station to use as a technology test bed,” NASA spokesman Michael Curie said in an emailed response to questions. “The results of the RRM tests will be shared with everyone, including them. NASA is not doing this to compete with industry. In fact, by conducting these tests on the space station, NASA believes it will help reduce the eventual risk and cost to industry.”

Nevertheless, NASA’s satellite repair and refueling programs may help produce a U.S. competitor to the MDA project or encourage U.S. firms to play a role in multinational satellite servicing ventures, government and industry officials said.

“MDA is the most experienced space robotics company on the planet,” Dave Huntsman, a 36-year NASA veteran and advocate within the agency for the creation of a competitive, commercial in-space servicing industry, wrote in an online comment following The Globe and Mail story. “It arrived at that position by skillfully leveraging U.S. led space programs paid for by the American taxpayer. Any team with MDA on it might reasonably expect to do well in an open competition. On the other hand, insisting to a foreign government that they enter a monopoly relationship with you might not be the best tactic.”

What’s more, NASA has been directed by U.S. policies and legislation to tackle both the vexing technological challenges of refueling orbiting spacecraft and the job of promoting a role for U.S. companies in this emerging market, industry officials said. They point to the National Space Policy issued in June 2010, which calls on government agencies to strengthen the U.S. commercial space industry and the 2010 NASA Authorization Act that gives the agency authority to develop technology for refueling spacecraft in orbit.

“NASA’s job is to help foster technological innovation and commercial applications for technology,” said Dennis Wingo, founder of Skycorp Inc. of Huntsville, Ala., and former chief technology officer for Orbital Recovery Corp., a company that sought to extend the life of satellites using an orbiting tug. “If NASA deems that satellite servicing is important to the nation, then no foreign company has any right to comment.”

One of the world’s experts on satellite servicing, Frank Cepollina, deputy associate director of the space servicing capabilities office at NASA Goddard in Greenbelt, Md., did not return requests for comment on this story. In a May interview, Cepollina said on-orbit repair and refueling, specifically the job of extending the life of commercial communications satellites, presents a great opportunity for U.S. space companies. “In the early 1960s because we launched a couple of communications satellites, we became the catalyst for the commercial communications industry,” Cepollina said. “For a while the U.S. was the major producer of those satellites. Now, in more recent times, it is not.”

A U.S. role in the satellite servicing market would not only reinvigorate the commercial space industry but would strengthen U.S. industry’s role in developing robotic technology with applications for many types of manufacturing, Cepollina said. “One just has to look at U.S. competitiveness on any production line,” he said. “Very few operations can get by and be cost-competitive without robots.”

Still, on-orbit satellite servicing is years away. Any company or government agency that attempts it must address two immense challenges: catching satellites built with no grapple fixtures and refueling spacecraft that were never designed to be refueled. Even if NASA obtains the funding and support needed to continue its satellite servicing demonstrations, it will be three to four years before the space agency is prepared to send a repair truck into geostationary orbit, Cepollina said.

Curie said NASA is exploring options to demonstrate satellite servicing tasks on government spacecraft including weather satellites. However, that work is more than two years away. Whenever it does occur, NASA will “coordinate this activity with industry and look for a way that we can assist the commercial sector,” he added.

NASA officials said they are eager to obtain industry input and form partnerships with companies interested in pursuing satellite servicing ventures. In May, Cepollina said the space agency would issue a request for industry proposals in this area. Curie said no such request for information or proposals has been issued.

Debra Werner is a correspondent for SpaceNews based in San Francisco. Debra earned a bachelor’s degree in communications from the University of California, Berkeley, and a master’s degree in Journalism from Northwestern University. She...