* Capsule's solar wings unfurl but problems remain
* Second of 12 supply flights for NASA
* Space taxi work may slow under federal budget cuts
By Irene Klotz
CAPE CANAVERAL, Fla., March 1 (Reuters) - A rocket built by Space Exploration Technologies blasted off on Friday on supply run to the International Space Station, but a thruster problem with the cargo ship threatened to derail the mission.
The 157-foot (48-meter) tall Falcon 9 rocket and Dragon cargo ship lifted off at 10:10 a.m. EST (1510 GMT) from the company's leased launch pad at Cape Canaveral Air Force Station, just south of NASA's Kennedy Space Center in Florida.
"It appears that although it achieved Earth orbit, Dragon is experiencing some kind of problem right now," John Insprucker, a Falcon 9 manager with Space Exploration Technologies, or SpaceX as the company is known, said during a webcast after the capsule's release into orbit.
The Dragon capsule, which carries more than 2,300 pounds (1,043 kg) of science equipment, spare parts, food and supplies, is scheduled to reach the station Saturday morning.
Engineers, however, were troubleshooting a problem with three of the capsule's four thruster pods, which are needed to maneuver in orbit and position the ship's solar arrays to face the sun.
"Holding on solar array deployment until at least two thruster pods are active," company founder and Chief Executive Elon Musk posted on Twitter.
The arrays were later deployed even though three of the four thruster pods were not operational, said SpaceX spokeswoman Christine Ra.
The glitch occurred about 11 minutes after liftoff, when the capsule's solar wings were to unfurl. SpaceX's onboard cameras did not show that happening.
The cargo run is the second of 12 missions for privately owned SpaceX under a $1.6 billion NASA contract.
Following a successful test flight to the space station in May 2012, SpaceX conducted its first supply run to the orbital outpost in October. During launch of that mission, one of the Falcon's nine engines shut down early, but the other motors compensated for the power shortfall.
The problem was traced to an engine material flaw, SpaceX president Gwynne Shotwell said on Thursday.
ANOTHER FREIGHTER ON THE WING
"The conclusions they came to, we agree with," added NASA space station program manager Mike Suffredini.
"Our role as NASA is to sit next to them and work with them and understand the anomaly so that we're comfortable. We have two options as the customer: We can either put our hardware on that vehicle or not," he said.
A second space freighter, built by Orbital Sciences Corp , is expected to debut this year.
NASA turned to private companies to ferry supplies to the Space Station, a $100 billion project of 15 nations, following the retirement of its shuttle fleet in 2011. Staffed by rotating crews of six, the orbiting laboratory flies about 250 miles (400 km) above the Earth.
With the shuttles grounded, NASA plans to hire private firms to fly astronauts as well as cargo, breaking Russia's monopoly on crew transport that costs more than $60 million per trip.
U.S. government spending cuts said to begin Saturday do not impact space station operations or supply runs, NASA's Suffredini said.
But the cutbacks, implemented under the "sequestration" law, will slow development of privately owned space taxis.
NASA has partnership agreements worth more than $1.1 billion through May 2014 with SpaceX, Boeing Co and privately owned Sierra Nevada Corp to develop passenger spacecraft.
Because of the expected budget cuts, NASA would effectively halt space taxi development work this summer. Under sequestration, the agency expects its $17.8 billion budget to drop to $16.9 billion, NASA administrator Charles Bolden wrote in a letter last month to Senate Appropriations Committee chairwoman Barbara Mikulski.
"Overall availability of commercial crew transportation services would be significantly delayed, thereby extending our reliance on foreign providers for crew transportation to the International Space Station," Bolden wrote.