Jon Goff has an interesting variation on a concept that’s been around for a long time, but never implemented: refueling a suborbital vehicle in space to allow it to get to orbit. It’s in between Black Horse, which did an aerial fueling (or rather, oxidizing, since the propellant transferred was the oxidizer rather than the fuel), and standard orbital refueling. There’s an up side and a down side to it, relative to aerial refueling.
The down side is that unless the suborbital trajectory is fairly high, at least in velocity, you don’t have a lot of time for the operations before entering the atmosphere. You’d only have a few minutes, but that might be enough to transfer several thousand pounds of propellants. You’d have a trade as to whether to transfer just fuel, or just oxidizer or both. The latter would increase the likelihood of failure, since you’d have to mate two transfer booms, and simultaneously transfer two fluids.
The up side is that, out of the atmosphere, it’s easier and safer to fly in formation, because there are no wind gusts to worry about, and the physics is much more predictable (gravity doesn’t tend to vary much over non-astronomical times).
In a sane world, NASA would have long ago built an X-vehicle to prove out the concept, but that’s not the world in which we live. What I’d like to see is a prize for the first demonstration of such a propellant transfer operation, which all of the suborbital folks – Scaled (or VG), XCOR, Masten or Armadillo or others — could go after. You could have tiers of total propellant transferred, or total propellant transferred in a given time.
The other appealing thing about it is that, as Jon notes, it has benign abort characteristics. Which brings to mind another prize that NASA could offer (again, in a sane world). If reliability is really valued (the focus on heavy lift in general, and Ares in particular, would indicate that it’s not particularly, despite the advertisements), like low cost, it will only be achieved through high flight rates, and no one will really believe it until it’s been demonstrated. Fortunately, reusable suborbital vehicles are capable of lots of flights for low marginal cost per flight. So all they need is funding to do lots of flights. I would propose a prize for a consecutive number of successful deliveries to orbit (you could even start off with suborbital missions). Or, rather, consecutive number of non-failures, where failure is defined as losing the payload. In other words, you wouldn’t be penalized for an intact abort. The prize would be won when the requisite number of missions were flown with no losses. Abort rate could be a tie breaker for multiple winners.
If you wanted to have a demonstrated reliability (defined as non-payload loss, not mission success) of 0.999, you’d have to fly a thousand flights. If the marginal cost of a suborbital flight is, say, $10K, this would cost ten million, about the same as the X-Prize. So offer a fifty-million dollar prize, and see who goes for it. Once that’s won, offer half a billion for orbital.