They already know about the screwup, and want to know what he was doing in the lab anyway. He's all, "observing! Duh!" and points out that it was an important moment, and there was no other way to witness it, but Walternate somehow managed to spot the hairless guy in a suit standing in the middle of his lab.
The killjoy Observers point out that it's the boy who's important, not the moment, and he needs to take action to restore balance: "You will have an opportunity to fix this," says one of them. We'll call him "Jerry." Oh, and now the scene is over.
Back at the lab, Carla arrives, surprised to see Walter already there and working (he's been there all night). She's very much the 1985 Astrid, it seems. Walter's been building some kind of contraption, and he explains that Walternate found a cure for Peter: "It's not too late. I can save him," says Walter. Carla gently points out that Peter's dead, and Walter says he's talking about the Peter on the other side. He explains about Walternate missing the solution, because he was distracted by a man in the lab. "And when he returned, the positive result had failed, and so he moved on." Carla figures Walternate will figure out what he missed and go back, but Walter says Walternate is just like him -- except for the "finding a cure for his dying son" part, I suppose -- and therefore won't look back. "He didn't see the compound, but I did. And I've reproduced it." We see that Walter is whipping up a batch of blue magic in a flask, which he says just needed minor modification. "And without this, Peter will die. He'll die all over again. Which is why I have to go over there." Carla can't believe what she's hearing, and Walter is babbling about the "Casimir effect" which should produce a thinner, more porous region of space-time, and he only needs to affect the area for long enough to cross over with a vial of the cure, and then recreate the effect to cross back again. Oh. Well, as long as you're not planning anything CRAZY. Carla says, "Walter, you're trying to create a wormhole into another universe?" and Walter's all, "I think I just said that!" And then he goes off to find a map, because he noticed that Peter's bag was already packed for the lake house, which is where they always go this time of year, so that's where he's going to cross over.