A massive explosion has destroyed a Facebook satellite and brought calls for compensation.

A Falcon 9 rocket by Elon Musk's firm SpaceX and its satellite cargo exploded during a routine test firing at Cape Canaveral last week, just days before it was due to make a delivery to Earth’s orbit.

The communications satellite was owned by Israel-based Space Communication, but set up for use by Facebook as part of a project to bring internet coverage to currently disconnected parts of the world.

Facebook founder Mark Zuckerberg said he was deeply upset.

“We remain committed to our mission of connecting everyone, and we will keep working until everyone has the opportunities this satellite would have provided,” he wrote in a blog post from Africa. 

But the Israeli firm wants compensation.

Space Communications (Spacecom) has indicated it is seeking US$50 million (A$66 million) or a free flight from SpaceX.

It is unclear what the company might get, because SpaceX does not disclose contract or insurance terms and is not publicly-listed.

This has allowed SpaceX to hide any insurance it has beyond what is required by the Federal Aviation Administration for liability and damage to government property.

Spacecom could also look to collect US$205 million from Israel Aerospace Industries, builders of the AMOS-6 satellite.

Spacecom expects the loss of the satellite to knock its equity down to US$123 million, a drop of about US$30 million. This comes after the company’s shares fell 9 per cent on the day of the explosion, and another 34 per cent when trading resumed after the weekend.

It could also damage Spacecom’s planned merger with Beijing Xinwei Technology Group, which agreed to buy Spacecom for US$285 million, contingent on the successful launch and operation of the AMOS-6 satellite.

AMOS-6 satellites were to be used by several key clients, including Facebook and Eutelsat Communications, but these firms are now reportedly looking at other options.

SpaceX says it will shift flights to a second launch site in Florida.