Erp Exam Preparation Handbook

2012 ERP® Exam Preparation HandbookThe designation for risk professionals in the energy sector

2012 Energy Risk Professional (ERP®) Examination Preparation Handbook

© 2012 Global Association of Risk Professionals. All rights reserved. 1

A Framework for Tackling the ERP Exam

The ERP Exam Preparation Handbook is

a study aid for candidates to reference

as they prepare to take the Energy Risk

Professional (ERP®) Exam. The Handbook

highlights key concepts, fundamental

knowledge and quantitative relationships

found in the readings outlined in the ERP

Study Guide and is intended to augment,

not to replace, the ERP Examination AIM

Statements or Study Guide respectively; it

is strongly recommended that candidates

incorporate these documents in their

exam preparation.

About the ERP Examination

The ERP Examination consists of 160

questions drawn exclusively from the core

readings outlined in the ERP Study Guide.

The content covered in the coure readings

spans both the physical commodity and

financial energy markets and has been

compiled in consultation with GARP’s

Energy Oversight Committee (EOC). While

many of the readings are written from a risk

management point-of-view, some others

are not. In fact, a number of readings for

topics within the physical commodity

section may be somewhat technical or

scientific in nature. In these cases, candi-

dates should focus not on the technical

details of the reading but rather on the

overall content of the material from the

perspective of a risk manager with an eye

towards applying the information towards

situations they may encounter during their

energy risk career. For example, candidates

will not be asked specific engineering

questions (such as calculating pipeline

wall strength) or highly in-depth geologic

questions on the ERP Exam. If candidates

are unsure of the purpose of a reading,

they should always consult the relevant

AIM Statements for guidance. Moreover, it

is possible that outside material the candi-

date has read may provide information or

definitions that conflict with a core ERP

reading. In the case of such a conflict, the

candidate should always rely on the core

readings referenced in the ERP Study Guide

as questions on the ERP Exam will be drawn

exclusively from this material.

Preparation for the Exam

The Energy Risk Professional certification

Exam is a self-directed study program.

One often asked question is: “how long will

it take me to prepare for the ERP Exam?”

Unfortunately, this question has no simple

answer. Exam preparation will vary from

individual to individual and will be based

on a number of factors including an individ-

ual’s professional experience, their general

level of knowledge of the energy markets

and reading comprehension aptitude.

For past exams, a majority of candidates

report spending between 150 to 300 hours

preparing for the exam. To accommodate

those demands, this handbook offers two

reading plans to distribute the reading

material over 15- or 20-week intervals.

However, these plans are only meant to

be a guideline; you may feel the need for

more or less preparation time.

In general, GARP recommends that candi-

dates prepare for the exam at a gradual but

steady pace; attempting to “cram” study

time into the weeks immediately before

the exam is not likely to be a successful

preparation method.

Exam preparation will vary from individual to individual and will be based on a number of factors including an individual’s professional experience,

their general level of knowledge of the energy markets and reading comprehension aptitude.

2 © 2012 Global Association of Risk Professionals. All rights reserved.


AIM Statements,Practice Exams and Quizzes

Study Groups

Exam Language

The AIM Statements have been developed as a general guide for exam question development

and should be referenced in conjunction with the core readings contained in the ERP Study

Guide. Reviewing the material in the Study Guide with the AIM statements in mind will help

candidates to better prepare for the exam by focusing their attention on the topics considered

most relevant and applicable to a risk management practitioner in the energy industry.

To further assist candidates in their preparation for the ERP Examination, GARP has created

ERP Practice Exams and Practice Quizzes that are available on our website. The Practice

Exams are designed to simulate both the style and range of questions found on the ERP

Examination, thus helping ERP Candidates to gauge the expected time necessary to answer

individual questions and to devise an exam day strategy. Each of the four Practice Quizzes

provide a series of ten review questions which focus on specific sections of the ERP

Examination: Hydrocarbons, Electricity/Renewables, Financial Products, and Modeling/Risk

Management techniques. The Practice Quizzes are designed to provide candidates with a tool

to review and test their comprehension of key concepts as they work through the study plans

outlined herein. It is strongly suggested that Practice Quizzes be taken after a candidate

completes their review of the core readings that precede each quiz (please see the 15- and

20-week reading plans for more information). Practice Exams and Practice Quizzes include

explanations of the correct answer for each question so that candidates can better under-

stand their incorrect replies and identify areas of weakness that need reinforcement. The ERP

Practice Exams and Practice Quizzes are available for free download on the GARP website at

http://www.garp.org/erp/study-center/free-practice-exams.aspx.

GARP strongly encourages candidates to form study groups, whenever possible, so that they

may prepare for the examination with others. Study groups are a great way for candidates to

share the study load while helping each other with topics where they may individually have a

weakness; it is also a good way to meet fellow ERP candidates. We encourage candidates to

use both the official ERP Facebook and LinkedIn pages to find or form local study groups for

the ERP Exam.

Finally, there are a number of third-party course providers who offer ERP Exam preparation

courses for candidates who feel they may benefit from a more structured test-preparation

program. A list of GARP-approved third-party course providers can be found at

http://www.garp.org/erp/study-center/exam-preparation-providers.aspx.

The dialect used in the examination is American English. GARP is aware that not every ERP

candidate has American English as his or her native language. In the exam development

process, GARP strives to ensure that questions are written in a clear, concise form and avoid

the use of colloquialisms or other terms or phrases that may be unfamiliar to a non-native

American English speaker.

http://www.garp.org/erp/study-center/exam-preparation-providers.aspx

http://www.garp.org/erp/study-center/free-practice-exams.aspx



Calculator Policy

Key Concepts,Quantitative Relationships,

Common Abbreviations and Contract Specifications

Only the following types of business calculators are authorized for use on the examination,

there will be no exceptions to this policy. Use of a non-authorized calculator during the exam

will result in the candidate’s answer sheet not being graded, and the candidate receiving no

score for the exam. Candidates may not consult the operator’s manual for their calculator

during the exam. Calculator memory must be cleared prior to the start of the exam. The only

calculators approved for use during the ERP Examination are:

• Texas Instruments BA II Plus (both versions) including the BA II Plus Professional

• Hewlett Packard 10B II, 10B II+, 20B, 12C (including the HP 12C Platinum and the

Anniversary Edition)

To help ensure a positive exam experience, candidates should review all information about

exam day procedures at http://www.garp.org/erp/exam-overview/exam-day-information.aspx.

No exceptions to these procedures will be made on exam day.

The key concepts listed below are intended to help candidates identify the major themes

from each section of the Study Guide. These represent the core concepts that ERP candidates

should be well versed in as they prepare for a career in the field of energy risk management.

Candidates should note that in many cases a key concept will relate directly or indirectly to

several AIM statements throughout the core readings.

Hydrocarbon Resources

• The legal aspects of how mineral rights to a reserve are acquired; how reserves are put

into production

• Crude oil grades, specifications and relative value against benchmark crudes

• How crude oil prices are set by the global market

• The basics of the refining process—what products are created from crude oil, refinery

complexity and how complexity affects operating costs and production decisions

• Unconventional hydrocarbon resources and their growing importance for global markets

• Basics of the natural gas industry including volumetric and heat measures, and what

constitutes natural gas

• Liquefied Natural Gas (LNG)—how is it produced, how contracts for trade are structured

and the role of LNG in the global energy market today

• Techniques like the Fischler-Tropsch and Gas-to-Liquids processes and the commodities

they produce

• The impact of shale gas on global gas pricing and market economics

• Grades of coal, including their heat content rankings

http://www.garp.org/erp/exam-overview/exam-day-information.aspx



Electricity Generation, Distribution and Trading

• Electricity market fundamentals including the factors that influence how rates are set

• Source fuels for electricity production (including Nuclear and Hydro), knowledge of the

benefits and drawbacks of each

• Heat rate and spark spread calculations—how they are performed and how they impact

market decisions

• The fundamentals of electricity transmission and the unique financial products used to

market electricity

• The differences between a regulated and deregulated electricity market; the key

operational features of the deregulated market

Renewables, Trends in the Carbon Market and Emissions Trading

• Fundamental economic drivers of renewable energy projects

• The sources of energy that are considered “renewable,” the benefits and drawbacks of each

• How market-based carbon credit/carbon offset transactions work

• Project finance calculations and investment decisions associated with renewable projects

• Current regulatory trends in global carbon markets and clean-air regulation

Financial Products, Trading, Hedging and Valuation

• Understand the difference between forward and future contracts, how and why each is used

• Relate the impact of storage cost, convenience yield and lease rate on forward pricing

• Evaluate the various types of financial instruments used in energy transactions, including

the different kinds of swaps, options and structured transactions and their practical application

• Appreciate the unique characteristics of energy and natural gas commodities and under-

stand how these traits affect the market for electricity and natural gas commodity trading

and valuation

• Be able to create and evaluate a basic arbitrage transaction using energy commodities and

evaluate the risk/reward associated with fundamental trading positions

• Develop a working knowledge of the “greeks” and understand how they relate to option

valuation and risk management

• Construct a basic hedge position and understand what it means to dynamically hedge

a position

• Be able to construct and evaluate a hedge for physical and/or financial assets

• Understand real option valuation and how it is used for investment decisions

• Use a binomial lattice to value a real option





Modeling Techniques for Energy Commodities

• Understand the purpose of modeling; know the basic model types and parameters,

including their limitations

• Know the terms backwardation and contango and how they affect forward price curves

• Understand the key concepts related to volatility including the differences between

historical volatility, market implied volatility, model implied volatility, volatility skews and

smiles and annualized volatility

• Know the special challenges associated with modeling electricity

Risk Management Fundamentals

• Identify the various types of risk: what are they, in what situations are they found and how

are they managed

• Understand Value-at-Risk (VaR), how it is calculated, and how it is used

• Know the types of stress tests typically used by financial organizations and the general

benefits of stress testing

• Understand the difference between counterparty risk and credit/lending risk

• Know the role of a central clearinghouse in financial transactions

• Understand the relationship between Expected Exposure and Potential Future Exposure

• Be familiar with the fundamentals of Enterprise Risk Management (ERM)

Current Events

The Current Events section is designed to capture several developing industry trends that

may impact the decision-making process of an energy risk professional, yet are too recent to

be addressed in published text books on energy risk management. Candidates should study

and understand the basic concepts associated with each reading as summarized within the

AIM statements related to each.

The ERP Exam is not meant to be a rigorous quantitative exercise that requires memorization

of highly complex formulas. ERP candidates are, however, expected to have an understanding

of fundamental quantitative concepts and relationships covered in the core readings. Candi-

dates should be prepared to solve a number of mathematical calculations based solely on their

understanding of these fundamental concepts. While we do not provide a list of formulas for

the exam, in some cases, particularly for more complex or obscure calculations, information

about terms or values within an equation may be provided to the candidate in the question.



Fundamental Theories and Quantitative Relationships



Fundamental data analysis concepts include but are not limited to:

• Time series analysis and normal vs. lognormal distribution analyses

• Mean, standard deviation, skew, kurtosis

• Statistical testing for data integrity and measures of fit

• Mean reversion

Fundamental pricing and valuation theories include but are not limited to:

• Spot price estimation

• Forward price estimation

• Futures price estimation using energy commodity spot price data

• Option valuation

• Real option valuation

Fundamental quantitative relationships include but are not limited to:

• Barrel of Oil Equivalency (BOE)

• Gas/oil ratio

• Energy commodity calculations: heat rate, crack spread, spark spread

• Zero coupon bond payoff—Synthetic commodity

• Energy commodity future and forward contract valuation

• Energy commodity arbitrage profit/loss

• Payoff profile for American, European and various exotic options

• Cashflows associated with various types of swap transactions

• Put/call parity

• Profit/loss position for straddle, collars and other hedging structures

• Net profit calculation for a power plant

• Volatility estimation using historical data and market implied prices

• Average long-term volatility from discrete volatilities

• Fixed-for-floating swap settlement calculations

• Value-at-Risk (VaR) of an asset or portfolio for a given confidence level

• Calculate credit risk exposures including: settlement risk, replacement risk,

expected exposure and potential future exposure

• Heating and cooling degree days (HDD/CDD)

The following is a list of abbreviations commonly used in the energy risk management profes-

sion; many of these abbreviations will likely appear on the ERP Examination. Candidates are

advised to be familiar with all of the abbreviations on this list before sitting for the exam.

Fundamental Theories and Quantitative Relationships

Common Abbreviations



ATM At-the-money

Bbl Barrel of _________

BCF Billion Cubic Feet (gas measurement)

Btu British Thermal Unit

CAD Canadian Dollar

CEO Chief Executive Officer

CFO Chief Financial Officer

CFTC Commodity Futures Trading Commission

CIF Cargo, Insurance, Freight

CME Chicago Mercantile Exchange

CNG Compressed Natural Gas

CO2 Carbon dioxide

CRO Chief Risk Officer

ERCOT Electric Reliability Council of Texas

ERM Enterprise Risk Management

EUR Euro (currency)

FASB Financial Accounting Standards Board

GBM Geometric Brownian Motion

GO Gasoil

GTL Gas-to-liquids

ICE Intercontinental Exchange (London)

ISO Independent System Operator

ITM In-the-money

kW Kilowatt

kWh Kilowatt hour

LNG Liquefied Natural Gas

LPG Liquid Petroleum Gas

LSFO Low-Sulfur Fuel Oil

MISO Midwest Independent System Transmission Operator (electricity market)

MMBtu One million British Thermal Units

MT Metric ton

MTM Mark-to-market

MW Megawatt

MWh Megawatt hour

NGL Natural Gas Liquids

NWE Northwest Europe (Rotterdam, physical delivery point for gas/oil contracts)

NYMEX New York Mercantile Exchange

OTC Over-the-counter

OTM Out-of-the-money

PJM Pennsylvania/New Jersey/Maryland Interconnection (electricity market)

RBOB Reformulated Blendstock for Oxygenate Blending (standard NYMEX gasoline contract)

RTO Regional Transmission Organization

Therm A measure equal to 100,000 BTUs

USD United States Dollar

VaR Value-at-Risk

WTI West Texas Intermediate (crude oil )

Common Abbreviations



Exchange traded energy commodity futures and options contracts are typically traded in

standardized lot sizes. Listed below are the volumetric sizes of key energy commodity futures

and options contracts traded on exchanges like the CME, ICE and NYMEX. Candidates are

advised to be familiar with the characteristics of standard exchange-traded contracts before

sitting for the exam.

Crude Oil: each contract is for 1,000 barrels (equal to 42,000 gallons)

Heating Oil: each contract is for 42,000 gallons

Gasoline (and other distillates): 42,000 gallons

ICE Gasoil Futures: 100 Metric Tons

Natural Gas (Henry Hub Futures): 10,000 MMBtu

Natural Gas Swap (Henry Hub, Chicago, others): 2,500 MMBtu

Electricity (CME PJM futures contracts): 5 MWh

Electricity (ICE UK Base futures contracts): 5 MWh minimum

Electricity (CME options contracts): 40 MWh

Electricity (NYMEX futures contracts): 40 MWh

Outlined on the following pages are two suggested plans, covering 15 and 20 weeks, respec-

tively, for tackling the material outlined in the ERP Study Guide. Weekly readings include

selections from Current Issues in Energy, paired whenever possible with relevant topics from

other portions of the Study Guide. The primary goal of the plans is to break the core readings

down into logical pieces that can be disseminated by candidates more efficiently. Every candi-

date has a unique level of experience and reading aptitude; it is impossible to accurately judge

the amount of time necessary for each individual candidate to prepare for the exam. Both

the 15- and 20-week study plans are offered simply as a guideline or tool for approaching the

material. Candidates should always feel free to adjust the schedule based on their experience,

study time available and possible desire to add variety by intertwining physical and

financial readings.

Standard EnergyContract

Specifications

15- and 20-WeekStudy Plans

ERP Exam

15-WeekStudy Plan



Description

Hydrocarbon Resources

Session

1

2

3

4

Reading

Institut Français du Petrolé Publications. Oil, Gas Exploration, and Production: Reserves,Costs, Contracts (Paris: Editions Technip, 2007). Chapter 3.

Charlotte Wright and Rebecca Gallun. Fundamentals of Oil & Gas Accounting, 5th Edition (Tulsa, OK: PennWell, 2008). Chapters 1 and 15.

Norman J. Hyne. Nontechnical Guide to Petroleum Geology, Exploration, Drilling, andProduction, 2nd Edition (Tulsa, OK: PennWell Books, 2001). Chapter 1.

Purvin & Gertz, Inc. The Role of WTI as a Crude Oil Benchmark. Section Three.

William L. Leffler. Petroleum Refining in Nontechnical Language, 3rd Edition(Tulsa, OK: PennWell, 2000). Chapter 20.

Bunkerworld. D2 and No.2 Diesel Fuel: An Introduction.

Davis W. Edwards. Energy Trading and Investing (New York: McGraw-Hill, 2010). Chapter 2.1.

Vivek Chandra. Fundamentals of Natural Gas: An International Perspective(Tulsa, OK: PennWell Books, 2006). Chapters 1, 2, 3, and 4.

Frank Fabozzi (ed.): The Handbook of Commodity Investing (Hoboken, NJ: John Wiley &Sons, 2008). Chapter 36.

Thomas O. Miesner and William L. Leffler. Oil and Gas Pipelines in Nontechnical Language (Tulsa, OK: PennWell Books, 2006). Chapters 10 and 12.

Michael Toman, Aimee E. Curtright, David S. Ortiz, Joel Darmstadter, Brian Shannon. Unconventional Fossil-Based Fuels: Economic and Environmental Trade-Offs. (Santa Monica, CA: Rand, 2008). Chapter 4.

Department of Energy Publication: Liquefied Natural Gas: Understanding the Basic Facts.

PriceWaterhouseCoopers: Today’s LNG Market Dynamics.

Kenneth Medlock. Impact of Shale Gas Development on Global Gas Markets(Wiley Periodicals, Inc., 2011).

International Monetary Fund. “Oil Scarcity, Growth and Global Imbalances.”

James Speight. Handbook of Coal Analysis (Wiley-Interscience, 2005). Chapters 1 and 2.

James T. Bartis, Frank A. Camm and David S. Ortiz. Producing Liquid Fuels from Coal:Prospects and Policy Issues (Santa Monica, CA: Rand, 2008). Chapters 3 and 6.

Richard Morse and Gang He. “The World's Greatest Coal Arbitrage: China's Coal ImportBehavior and Implications for the Global Coal Market.”

Take ERP Practice Quiz #1



Description

Electricity

Renewable Energy

Financial Products

Session

5

6

7

8

Reading

Davis W. Edwards. Energy Trading and Investing (New York: McGraw-Hill, 2010). Chapters 2.2 and 4.1.

Chris Harris. Electricity Markets: Pricing, Structures and Economics (West Sussex, England: John Wiley & Sons, 2006). Chapter 7.

Sally Hunt. Making Competition Work in Electricity (New York: John Wiley & Sons, Inc.,2002). Chapters 2, 7 and 8.

Davis W. Edwards. Energy Trading and Investing (New York: McGraw-Hill, 2010). Chapters 4.3 and 4.4.

Roy L. Nersesian. Energy for the 21st Century: A Comprehensive Guide to Conventionaland Alternative Sources (Armonk, NY: M.E. Sharpe, Inc., 2007). Chapter 8.

David Schlissel and Bruce Biewald. Nuclear Power Plant Construction Costs (Synapse Energy Economics, Inc.).

Peter Coy. The Prospect for Safe Nuclear (Bloomberg Businessweek, March 24, 2011).

Ann Chambers. Renewable Energy in Nontechnical Language (Tulsa, OK: PennWellBooks, 2006). Chapter 6.

Geoffrey Heal. The Economics of Renewable Energy.

Chris Grobey, John Pierce, Michael Faber and Greg Broome. Project Finance Primer forRenewable Energy and Clean Tech Projects.

State and Trends of the Carbon Market (The World Bank, 2011). Sections 2 though 4.


Govinda Timilsina and Ashish Shrestha. Biofuels: Markets, Targets and Impacts(The World Bank, July 2010). Sections 1 through 5.


Bloomberg New Energy Finance. Global Trends in Renewable Energy Investment.


Steven Errera and Stewart L. Brown. Fundamentals of Trading Energy Futures & Options,2nd Edition (Tulsa, OK: PennWell Books, 2002). Chapter 3.

Vincent Kaminski (ed). Managing Energy Price Risk (London: Risk Books, 2004). Chapters 1, 2 and 3.

Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates. “CFTC Adopts Final PositionLimit Rules at October 18 Open Meeting.”

Ivan Diaz-Rainey, Mathias Siems and John Ashton. “The Financial Regulation of European Wholesale Energy and Environmental Markets.”



Description

Financial Products

Modeling Energy Prices

Session

9

10

11

12

Reading

Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management(London: Lacima Publications, 2000). Chapter 9.

Robert McDonald, Derivatives Markets, 2nd Edition (Boston: Addison-Wesley, 2006).Chapter 6.


Steve Leppard. Energy Risk Management: A Non-technical Introduction to Energy Derivatives (London: Risk Books, 2005). Chapter 4.

Dragana Pilipovic. Energy Risk: Valuing and Managing Energy Derivatives, 2nd Edition(New York: McGraw Hill, 2007). Chapters 9 and 10.

Alexander Triantis. Handbook of Modern Finance (New York: Research Institute ofAmerica, 2003). Chapter 7.

William Bailey, Benoit Couet, Ashish Bhandari, Soussan Faiz, Sunaram Srinivasan andHelen Weeds. Unlocking the Value of Real Options (Oilfield Review Winter 2003/2004).

Peter C. Beutel. Surviving Energy Prices (Tulsa, OK: PennWell Books, 2005). Chapter 3.

Tom James. Energy Markets: Price Risk Management and Trading (Singapore: JohnWiley & Sons, 2008). Chapter 13.

Geoffrey Considine, Ph.D. Introduction to Weather Derivatives.

Kevin Baumert and Mindy Selman. Data Note: Heating and Cooling Degree Days(World Resources Institute, 2003).


Dragana Pilipovic. Energy Risk: Valuing and Managing Energy Derivatives, 2nd Edition(New York: McGraw Hill, 2007). Chapters 2, 5 and 8.


Helyette Geman (ed). Risk Management in Commodity Markets: From Shipping to Agriculturals and Energy. Chapter 2.

Dragana Pilipovic. Energy Risk: Valuing and Managing Energy Derivatives, 2nd Edition(New York: McGraw Hill, 2007). Chapter 4.

Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management(London: Lacima Publications, 2000). Chapters 3, 4 and 8.



Description


Review

Session

13

14

15

Reading


Markus Burger, Bernhard Graeber, and Gero Schindlmayr. Managing Energy Risk: An Integrated View on Power and Other Energy Markets (West Sussex, England: John Wiley & Sons, 2007). Chapters 6.2 and 6.3.

Alessandro Mauro. “Price Risk Management in the Energy Industry: The Value at RiskApproach,” Proceedings of the XXII Annual International Conference of the InternationalAssociation for Energy Economics (June 9-12, 1999).

Jose Ramon Aragones, Carlos Blanco, and Kevin Dowd. Incorporating Stress Tests IntoMarket Risk Modeling.

Craig Pirrong. The Economics of Central Counterparty Clearing: Theory and Practice.(ISDA Working Paper).

Tom James. Energy Markets: Price Risk Management and Trading (Singapore: JohnWiley & Sons, 2008). Chapters 10, 15 and 16.

Jon Gregory. Counterparty Credit Risk (West Sussex, England: John Wiley & Sons,2010). Chapters 2 and 3.

Casualty Actuarial Society, Enterprise Risk Management Committee. Overview of Enterprise Risk Management.

Ludwig Chincarini. A Case Study on Risk Management: Lessons from the Collapse ofAmaranth Advisors L.L.C.

Connecticut Law Review. Risk Management and Corporate Governance: The Case of Enron.

NERA Economic Consulting. “Lessons from the BP Deepwater Horizon Oil Spill” (September 2010).

Mark A. Cohen, Madeline Gottlieb, Joshua Linn, and Nathan Richardson. “DeepwaterDrilling: Law, Policy and Economics of Firm Organization and Safety.”


Take ERP Practice Examination(s) http://www.garp.org/erp/study-center/free-practice-exams.aspx

Review any areas of the ERP Study Guide where additional preparation is necessary.


ERP Exam

20-Week Study Plan



Description

Hydrocarbons Resources

Session

1

2

3

4

Reading

Institut Français du Petrolé Publications. Oil, Gas Exploration, and Production: Reserves,Costs, Contracts (Paris: Editions Technip, 2007). Chapter 3.

Charlotte Wright and Rebecca Gallun. Fundamentals of Oil & Gas Accounting, 5th Edition (Tulsa, OK: PennWell, 2008). Chapters 1 and 15.

Norman J. Hyne. Nontechnical Guide to Petroleum Geology, Exploration, Drilling, andProduction, 2nd Edition (Tulsa, OK: PennWell Books, 2001). Chapter 1.

Thomas O. Miesner and William L. Leffler. Oil and Gas Pipelines in Nontechnical Language (Tulsa, OK: PennWell Books, 2006). Chapters 10 and 12.

Purvin & Gertz, Inc. The Role of WTI as a Crude Oil Benchmark. Section Three.

William L. Leffler. Petroleum Refining in Nontechnical Language, 3rd Edition(Tulsa, OK: PennWell, 2000). Chapter 20.

Bunkerworld. D2 and No.2 Diesel Fuel: An Introduction.

James Speight. Handbook of Coal Analysis (Wiley-Interscience, 2005). Chapters 1 and 2.

James T. Bartis, Frank A. Camm and David S. Ortiz. Producing Liquid Fuels from Coal:Prospects and Policy Issues (Santa Monica, CA: Rand, 2008). Chapters 3 and 6.

Richard Morse and Gang He. “The World's Greatest Coal Arbitrage: China's Coal ImportBehavior and Implications for the Global Coal Market.”

Davis W. Edwards. Energy Trading and Investing (New York: McGraw-Hill, 2010). Chapter 2.1.

Vivek Chandra. Fundamentals of Natural Gas: An International Perspective(Tulsa, OK: PennWell Books, 2006). Chapters 1, 2, 3, and 4.


Michael Toman, Aimee E. Curtright, David S. Ortiz, Joel Darmstadter, Brian Shannon. Unconventional Fossil-Based Fuels: Economic and Environmental Trade-Offs.(Santa Monica, CA: Rand, 2008). Chapter 4.

Department of Energy Publication: Liquefied Natural Gas: Understanding the Basic Facts.

PriceWaterhouseCoopers: Today’s LNG Market Dynamics.

Kenneth Medlock. Impact of Shale Gas Development on Global Gas Markets(Wiley Periodicals, Inc., 2011).

International Monetary Fund. “Oil Scarcity, Growth and Global Imbalances.”




Description

Electricity

Renewable Energy

Financial Products

Session

5

6

7

8

9

10

Reading

Sally Hunt. Making Competition Work in Electricity (New York: John Wiley & Sons, Inc.,2002). Chapters 2, 7 and 8.

Chris Harris. Electricity Markets: Pricing, Structures and Economics (West Sussex, England: John Wiley & Sons, 2006). Chapter 7.

Davis W. Edwards. Energy Trading and Investing (New York: McGraw-Hill, 2010). Chapters 2.2, 4.1, 4.3 and 4.4.

Ann Chambers. Renewable Energy in Nontechnical Language (Tulsa, OK: PennWellBooks, 2006). Chapter 6.


David Schlissel and Bruce Biewald. Nuclear Power Plant Construction Costs(Synapse Energy Economics, Inc.).

Peter Coy. The Prospect for Safe Nuclear (Bloomberg Businessweek, March 24, 2011).

Geoffrey Heal. The Economics of Renewable Energy.

Chris Grobey, John Pierce, Michael Faber and Greg Broome. Project Finance Primer forRenewable Energy and Clean Tech Projects.

State and Trends of the Carbon Market (The World Bank, 2011). Sections 2 though 4.


Govinda Timilsina and Ashish Shrestha. Biofuels: Markets, Targets and Impacts(The World Bank, July 2010). Sections 1 through 5.

Frank Fabozzi (ed.): The Handbook of Commodity Investing (Hoboken, NJ: John Wiley &Sons, 2008). Chapter 37

Bloomberg New Energy Finance. Global Trends in Renewable Energy Investment.



Ivan Diaz-Rainey, Mathias Siems and John Ashton. “The Financial Regulation of European Wholesale Energy and Environmental Markets.”

Vincent Kaminski (ed). Managing Energy Price Risk (London: Risk Books, 2004). Chapters 1 and 2.

Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates. “CFTC Adopts Final PositionLimit Rules at October 18 Open Meeting.”



Description

Financial Products

Modeling Energy Prices

Session

11

12

13

14

15

16

Reading

Vincent Kaminski (ed). Managing Energy Price Risk (London: Risk Books, 2004). Chapter 3.

Robert McDonald, Derivatives Markets, 2nd Edition (Boston: Addison-Wesley, 2006).Chapter 6.


Geoffrey Considine, Ph.D. Introduction to Weather Derivatives.

Kevin Baumert and Mindy Selman. Data Note: Heating and Cooling Degree Days.(World Resources Institute, 2003).


Alexander Triantis. Handbook of Modern Finance (New York: Research Institute ofAmerica, 2003). Chapter 7.

William Bailey, Benoit Couet, Ashish Bhandari, Soussan Faiz, Sunaram Srinivasan andHelen Weeds. Unlocking the Value of Real Options (Oilfield Review Winter 2003/2004).


Peter C. Beutel. Surviving Energy Prices (Tulsa, OK: PennWell Books, 2005). Chapter 3.

Tom James. Energy Markets: Price Risk Management and Trading (Singapore: JohnWiley & Sons, 2008). Chapter 13.

Steve Leppard. Energy Risk Management: A Non-technical Introduction to Energy Derivatives (London: Risk Books, 2005). Chapter 4.





Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management(London: Lacima Publications, 2000). Chapters 4 and 8.

Helyette Geman (ed). Risk Management in Commodity Markets: From Shipping to Agriculturals and Energy. Chapter 2.





Description


Review

Session

17

18

19

20

Reading


Markus Burger, Bernhard Graeber, and Gero Schindlmayr. Managing Energy Risk: An Integrated View on Power and Other Energy Markets (West Sussex, England: John Wiley & Sons, 2007). Chapter 6.2.

Alessandro Mauro. “Price Risk Management in the Energy Industry: The Value at RiskApproach,” Proceedings of the XXII Annual International Conference of the InternationalAssociation for Energy Economics (June 9-12, 1999).

Jose Ramon Aragones, Carlos Blanco, and Kevin Dowd. Incorporating Stress Tests IntoMarket Risk Modeling.

Tom James. Energy Markets: Price Risk Management and Trading (Singapore: John Wiley & Sons, 2008). Chapter 10, 15 and 16.

Markus Burger, Bernhard Graeber, and Gero Schindlmayr. Managing Energy Risk: An Integrated View on Power and Other Energy Markets (West Sussex, England: John Wiley & Sons, 2007). Chapter 6.3.

Casualty Actuarial Society, Enterprise Risk Management Committee. Overview of Enterprise Risk Management.

NERA Economic Consulting. “Lessons from the BP Deepwater Horizon Oil Spill” (September 2010).

Jon Gregory. Counterparty Credit Risk (West Sussex, England: John Wiley & Sons,2010). Chapters 2 and 3.

Craig Pirrong. The Economics of Central Counterparty Clearing: Theory and Practice.(ISDA Working Paper).

Mark A. Cohen, Madeline Gottlieb, Joshua Linn, and Nathan Richardson. “DeepwaterDrilling: Law, Policy and Economics of Firm Organization and Safety.”

Ludwig Chincarini. A Case Study on Risk Management: Lessons from the Collapse ofAmaranth Advisors L.L.C.

Connecticut Law Review. Risk Management and Corporate Governance: The Case of Enron.


Take ERP Practice Examination(s) http://www.garp.org/erp/study-center/free-practice-exams.aspx

Review any areas of the ERP Study Guide where additional preparation is necessary.

ERP Examination—May 19, 2012 and November 17, 2012


2012 Energy Oversight Committee (EOC) Members

Ken Abbott ..................................Managing Director, Morgan Stanley & Company

Richard Apostolik .....................President and CEO, Global Association of Risk Professionals

Mark Galicia .................................Commercial Manager, BP North America, Inc.

Gordon E. Goodman ................Trading Control Officer, Occidental Petroleum Corporation

James Brown...............................Managing Director, Morgan Stanley & Company

Mark Jenner .................................Director, Credit Risk, BG Group

Jeff Jewell ....................................Chief Risk Officer, DTE Energy

Glenn Labhart, EOC Chair .....Partner, Labhart Risk Advisors, Inc.

Spyros Maragos ............................VP, Refined Products Analytics, Louis Dreyfus Energy Services, LP

Alessandro Mauro .....................Director of Risk Management, Litasco SA

Mark D. May ......................................Manager, Regional Risk Supply & Trading, Americas, ConocoPhillips

Jeff Parke .....................................Senior Director, Risk Management, Koch Industries, Inc.

Jonathan C. Stein ......................Chief Risk Officer, Vice President, Hess Corporation

Andrew D. Sunderman ............Managing Director, JP Morgan

Glen Swindle ...............................Managing Director, Energy Trade & Marketing, Credit Suisse

John Wengler .............................Director of Market Risk Controls, Hess Corporation

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About GARP | The Global Association of Risk Professionals (GARP) is a not-for-profit global membership organization dedicated topreparing professionals and organizations to make better informed risk decisions. Membership represents over 150,000 risk manage-ment practitioners and researchers from banks, investment management firms, government agencies, academic institutions, and corporations from more than 195 countries and territories. GARP administers the Financial Risk Manager (FRM®) and the Energy Risk Professional (ERP®) Exams; certifications recognized by risk professionals worldwide. GARP also helps advance the role of riskmanagement via comprehensive professional education and training for professionals of all levels. www.garp.org.

Erp Exam Preparation Handbook

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