A CubeSat powered by water is aiming to become the first mini satellite to orbit the moon.

A team of students from Cornell University is developing small satellites known as CubeSats that run entirely on water. The project is part of the Cube Quest Challenge by NASA's Space Technology Mission Directorate Centennial Challenge Program, which offers $5.5 million to the team who can build and test small satellites in orbit and beyond moon.

"This has a very important goal, and that is to demonstrate that you can use water as a propellant," Mason Peck, former NASA senior official and a professor of mechanical and aerospace engineering leading the team, said in a statement.

The satellite will be made entirely of off-the-shelf materials including the most inexpensive natural propellant: water. The CubeSat itself consists of two L-shaped twin halves, which will split apart and slowly separate to head to the moon's atmosphere. The twins will spin as they move apart to gain stability and balance.

With energy from the sun, the water stored in tanks below the "L" is electrolyzed into hydrogen and oxygen gases to be used as fuel. The fuel would propel the "L" twin satellites into the moon's orbit, the researchers said.

Apart from the water propellant, the team is also working on another core technology: optical navigation. The cameras on the craft will take pictures of the Earth, sun and moon to keep track of their location in space.

According to the researchers, a water-powered spacecraft would not rely heavily on Earth's resources. Instead, a spacecraft could refuel using, for example, ice found on asteroids.

"A lot of the mass we send into orbit these days is in the form of rockets - the only way we get anything into space," Peck said. "If we could refuel spacecraft while they're already in space, that means that we could go farther, probably faster, probably accomplish a lot more, and we wouldn't rely on Earth for supplies."

The team, known as the Cislunar Explorers, is currently in the third phase of the four-phase Ground Tournament portion of the challenge. If they make it to the overall top three, their CubeSat will be carried by NASA's Space Launch System (SLS) in 2018 to be tested.

So far, the Cislunar Explorers already had two top-three finishes, including a first-place in Ground Tournament 2 last spring. They have already won cash prizes of $20,000 for Ground Tournament 1 and $30,000 for Ground Tournament 2.

The competition is scheduled to end a year after the planned SLS launch.