A Quick Analysis of the Synapse "No Broadwater" Report by Someone Who Knows More than I Do
1. The report is generally thorough and reasonable, and reflects adequate knowledge of the subject.
2. Despite this, its conclusions strike me as fairly weak. It seems facile to argue against a project on the basis that it is inferior to some other set of projects, for which the likelihood of their being undertaken is unknown and highly uncertain. The best way to promote that competition is in the marketplace.
3. Synapse places great reliance on other projects that could supply gas to CT and NY. While these may indeed make Broadwater less attractive, they do not address our region's exposure to market conditions upstream (US Gulf Coast and Canada) and downstream (Boston area) of us. This is a fundamental strategic question. Do we want the option of a local source of gas, or are we content to remain at the mercy of these other supply points and markets?
4. A quick look at Synapse's website suggests they bring a primarily regulatory, rather than commercial perspective to bear. That may limit their authoritativeness in assessing commercial markets, relative to a more business-oriented consultancy.
5. Missing altogether from this analysis is any attempt to understand the underlying project economics from an investor perspective. No one puts up $1 billion to build this kind of facility without doing their homework on the market in which it would operate. Having analyzed projects of this magnitude in the past, I would guess that future gas prices and the timing and volume of throughput (sales), including competition from other sources, are likely to top any "tornado chart" for Broadwater's expected return and thus receive maximum management attention. A project like this would only proceed on the basis of a thorough, convincing analysis of the market demand. That doesn't make "trust us" a winning argument, but it also doesn't mean we should assume that Broadwater is staffed by incompetents and fools.
Ultimately, after reading Synapse's report I still don't know if Broadwater is a good project or a dog. Synapse has raised some pretty good questions for Broadwater to address, but I hardly see their report as sufficient to scuttle the project at this stage. If Broadwater has failed to make its case so far, Synapse has also failed to demolish it conclusively, in my view.