WASHINGTON — Orbital Sciences Corp. likely will decide in the next year or so whether to continue offering its air-launched Pegasus XL small rocket, demand for which has faded in recent years, according to David W. Thompson, the company’s chairman and chief executive.

With NASA conducting fewer small satellite missions and the U.S. Defense Department relying primarily on Minotaur rockets to loft its small payloads, launches of what once was Orbital’s signature product are now few and far between. The Minotaur family of rockets are based in part on excess missile hardware and assembled by Orbital under contract to the U.S. Air Force.

In a Jan. 12 interview, Thompson said Orbital has been able to sustain the Pegasus program despite the low launch rate due in part due to the vehicle’s commonality with other rockets the company builds, primarily the Orbital Boost Vehicle, a key component of the U.S. territorial missile shield known as the Ground -based Midcourse Defense system. The Orbital Boost Vehicle, used to hurl kill vehicles at incoming missile warheads, is effectively a ground-launched version of Pegasus minus the wings, he said.

But production of the Orbital Boost Vehicle is winding down following decisions by the U.S. government to curtail deployment of missile interceptors in the United States and to use a completely different system to defend Europe.

The Pegasus has only one firm mission on its manifest, now slated for 2011, although there are Pegasus-class missions in the NASA pipeline, Thompson said. Orbital also is looking at ways to better harmonize the Pegasus and Minotaur programs, he added.

“NASA unfortunately has had to cut back on the pace at which the agency can fund the small explorer-class and similar small science missions, and together with the migration of most of the defense missions to Minotaur it does raise that question about the long-term future” of Pegasus, Thompson said. “I don’t think it’s something that requires a decision in a matter of months but I think over the course of a year we probably need to sort it out.”

Retired U.S. Air Force Lt. Gen. Michael Hamel, Orbital’s senior vice president for strategy and development, said the Pegasus situation illustrates how decisions on one program in a company’s portfolio can affect others, even if the customers are different. “The point here is we depend upon our government customers’ demand as to what vehicle we actually will offer, but at the same time the cost of delivering that can shift dramatically depending on what decisions get made in different programs in different areas because everything is so intimately linked, particularly in areas such as solid-rocket propulsion as well as liquid,” he said.

Meanwhile, Orbital continues to make progress on its newest rocket development effort, the medium-lift Taurus 2. Conceived as a means to launch a class of payloads currently launched on United Launch Alliance’s Delta 2, which is being phased out of service, the Taurus 2 is now geared toward lofting Orbital’s Cygnus space station resupply vehicle. Cygnus and Taurus 2 are being developed with funding help from NASA, but Thompson said Orbital’s own planned investment in the vehicles is expected to total some $450 million.

Thompson said the first Taurus 2 is slated for delivery to its launch site at NASA’s Wallops Flight Facility, Wallops Island, Va., in June, to be followed by the second in December. The second vehicle will make the first flight, now scheduled for March 2011, carrying Cygnus in a demonstration funded in part by NASA’s Commercial Orbital Transportation Services program. The first vehicle will be used initially for testing and then be refurbished for a later flight, Thompson said.

Despite a problem with the rocket’s Russian-built main engine last year during a test in Samara, Russia, the Taurus 2’s debut remains on schedule, Thompson said, though he cautioned that delays are always possible. He noted that a test of the Taurus 2’s solid-fueled Castor 130 second-stage motor went off without a hitch in December, and said the NK-33 main engine was being tested to stresses well beyond its flight profile when the problems occurred. He added that engineers are still trying to determine whether an issue with the test stand contributed to the problem.

Thompson said Taurus 2 is a big part of Orbital’s future growth plans and that the vehicle also will be available to launch scientific and military payloads for the U.S. government. Taurus 2 upgrades are already planned as part of NASA’s space station resupply program, and the rocket eventually could be used to launch small to medium-sized communications satellites — another Orbital product line — to geostationary orbit, Thompson said.

The Taurus 2 would need a higher-energy upper stage to put satellites in geostationary orbit, Thompson said. Options include replacing the Castor 130 with something more powerful or adding a third stage to the rocket, he said. The rocket also would have to be launched from Cape Canaveral Air Force Station, Fla., rather than Wallops, whose latitude is not ideally suited for missions to geostationary orbit, he said.

Warren Ferster is the Editor-in-Chief of SpaceNews and is responsible for all the news and editorial coverage in the weekly newspaper, the spacenews.com Web site and variety of specialty publications such as show dailies. He manages a staff of seven reporters...