By Irene Klotz

CAPE CANAVERAL, Fla. (Reuters) - A proposal by Elon Musk's SpaceX to fuel its rockets while astronauts are aboard poses safety risks, a group of space industry experts that advises NASA has told the U.S. space agency.

"This is a hazardous operation," Space Station Advisory Committee Chairman Thomas Stafford, a former NASA astronaut and retired Air Force general, said during a conference call on Monday.

Stafford said the group's concerns were heightened after an explosion of an unmanned SpaceX rocket while it was being fueled on Sept. 1.

Causes of that explosion remain under investigation.

Members of the eight-member group, including veterans of NASA's Gemini, Apollo and space shuttle programs, noted that all previous rockets carrying people into space were fueled before astronauts got to the launch pad.

"Everybody there, and particularly the people who had experience over the years, said nobody is ever near the pad when they fuel a booster," Stafford said, referring to an earlier briefing the group had about SpaceX's proposed fueling procedure.

SpaceX needs NASA approval of its launch system before it can put astronauts into space.

NASA said on Tuesday it was "continuing its evaluation of the SpaceX concept for fueling the Falcon 9 for commercial crew launches. The results of the company's Sept. 1 mishap investigation will be incorporated into NASA's evaluation."

SpaceX said it is developing its human launch operations "hand-in-hand" with NASA and has spent 18 months identifying potential hazards and how to handle them.

SpaceX, owned and run by technology entrepreneur and Tesla Motors Inc CEO Musk, said it would re-evaluate its fueling system and launch processes depending on results of the accident investigation.

On Friday, SpaceX said it believes a fueling system issue caused a pressurized container of helium inside the rocket’s upper stage to burst on Sept. 1, triggering a fireball that destroyed the booster and a $200 million Israeli communications satellite it was to carry.

SpaceX uses extremely cold liquid propellants loaded just prior to blastoff to increase the rocket's power so it can fly back to Earth and be reused.

SpaceX's passenger spaceships, expected to begin flying in 2018, will be outfitted with an emergency escape system that can fly the capsule away from a failing rocket before or during launch.

NASA, which retired its shuttles in 2011, hired SpaceX and Boeing Co to fly crews to the space station. Until then, astronauts have been flying on Russian Soyuz capsules, at a cost exceeding $70 million per person.

(Reporting by Irene Klotz; Editing by David Gregorio)