NASA Funds Plan to Turn Used Rocket Fuel Tanks Into Space Habitats

NASA is on the cutting edge of space exploration, but it’s less good about making non-cutting edge space exploration efficient and cost effective. The agency is acutely aware of this, which is why it’s been trying to get commercial carriers to handle deliveries of supplies and astronauts to the ISS.
The next step is for private companies to take over space station construction for (soon) Earth orbit and (eventually) deep space. To that end, NASA has selected six partner companies to develop full-sized ground prototypes and concepts for deep space habitats, with the eventual goal of deploying habitats near the moon as a stepping stone to Mars.
Five of the partners, including Bigelow Aerospace, Boeing, Lockheed Martin, Orbital ATK, and Sierra Nevada will be designing habitats that are built on Earth and launched into space on rockets. It makes sense to do this, because it’s how habitats have always been sent into space. The sixth partner, NanoRacks, is teaming up with Space Systems Loral and United Launch Alliance to try something completely different: taking empty fuel tanks from the upper stages of rockets and turning them into space habitats on-orbit.
A rocket like the the Atlas V, which can deliver payloads of nearly 19,000 kg to low Earth orbit, consists of three primary pieces: on the bottom, you’ve got the first stage booster, which consists of a huge engine and some big tanks holding kerosene fuel and oxidizer. Above that, there’s the second stage, which consists of one or two smaller engines, a big tank for storing liquid hydrogen fuel, and a smaller tank for oxidizer. The payload, which is what all of the fuss is about, sits on top.
The first stage launches the rocket off of the pad and continues firing for about four minutes. Once the first stage is out of fuel, it separates, and if it’s a SpaceX Falcon 9, flies back home to be reused. If it’s anything else, including the Atlas V, the first stage crash lands in the ocean and sinks. Meanwhile, the second stage fires up its own engine (or engines) to boost the payload the rest of the way into orbit. On the Atlas V, the second stage is called Centaur. Once Centaur gets its payload where it needs to go, it separates, and then suicides down into Earth’s atmosphere. 
Getting a payload into space is so expensive because you have to build up this huge and complicated rocket, with engines and guidance systems and fuel tanks and stuff, and then you basically use it for like 15 minutes and throw it all away. This is why SpaceX is trying so hard to recover the first stage of the Falcon 9.
But what about the second stage? You’ve got a whole bunch of hardware that made it to orbit, and when getting stuff to orbit costs something like $2,500 per kilogram, you then tell it to go it burn itself up in the atmosphere, because otherwise it’s just useless space junk.
NanoRacks, a company that (among other things) helps NASA with payload management on the ISS, feels like this is wasteful. And they’re right. The hydrogen fuel tank on a Centaur upper stage has a diameter of over 4 meters, and an interior volume of 54 cubic meters.
By way of comparison, the inflatable BEAM module that arrived at the ISS earlier this year has an interior volume of 16 cubic meters. Centaur’s fuel tank is pressurized, rugged, and most importantly, already in space for free, and NanoRacks wants to leverage that to create inexpensive space habitats for humans.