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Erp SG Web 122019 Final PDF
Erp SG Web 122019 Final PDF
ERP ®
Study Guide
garp.org/erp 2
2020 Energy Risk Professional (ERP®)
Exam Study Guide
ERP PROGRAM Each year, we invite certified ERPs from a variety of
The ERP certification is the world’s first and only disciplines and geographies to participate in the exam
internationally recognized designation developed development process. Our dual collaboration with EOC
by energy professionals, for energy professionals, to members and certified ERP alumni ensures that the ERP
assess and validate energy professional knowledge Exam and curriculum remain consistent with current
and skills. It objectively assesses and validates industry practice.
candidates’ skills and knowledge of the tools used
to manage and measure energy risk. Certified 2020 ERP LEARNING OBJECTIVES
ERPs can apply knowledge about the production, AND STUDY GUIDE
transportation, and storage of physical energy The 2020 ERP Learning Objectives and 2020 Study
commodities; the structure and practical application Guide are valuable exam tools that candidates should
of energy derivatives; energy market data and price reference frequently when preparing for the Exam.
modeling; and the identification, measurement, and Each exam question is developed from and directly
management of risk in the energy industry. references a specific reading and related learning
objective. Candidates are expected to be familiar
ERP CURRICULUM with the learning objectives and be able to apply the
Development of the ERP Exam curriculum is guided principles on the Exam.
by GARP’s Energy Oversight Committee (EOC), a
panel of senior practitioners and academics with 2020 ERP CURRICULUM CHANGES
energy market experience and risk management Returning 2019 ERP candidates should closely review
expertise. The exam topics and required readings the 2020 curriculum for added and deleted readings and
listed in the 2020 ERP Study Guide and 2020 learning objectives in all domains. The 2020 curriculum
Learning Objectives (LOBs) are updated annually, in includes a new Renewables domain and combines the
conjunction with the EOC, to ensure the ERP Exam previously separate Natural Gas and LNG domains
remains a timely and accurate assessment of the among other changes.
knowledge and skills required of energy market and
risk professionals. COMMONLY USED CONTRACT
SPECIFICATIONS
ERP EXAM Exchange-traded energy commodity futures and option
The ERP Exam Part I and Part II evaluate a candidate’s contracts are typically transacted in standardized lot
knowledge of key concepts aligned with the topics below: sizes. Unless otherwise noted, exam questions will
assume the following standard volumetric terms:
ERP EXAM PART I | 80 QUESTIONS • Crude Oil:
• Crude Oil Markets and Refined Products 1,000 barrels (equal to 42,000 gallons) per
• Natural Gas Markets and LNG Trends contract
• Renewable Energy • Gasoline futures:
• Electricity Markets and Coal 42,000 gallons per contract
• ULSD futures:
ERP EXAM PART II | 60 QUESTIONS 42,000 gallons per contract
• Market Risk • Gasoil (diesel) futures:
• Credit Risk and Liquidity Risk 100 metric tons (MT) per contract
• Financial Energy Products • Natural gas (Henry Hub) futures:
• Risk Governance, Enterprise Risk Management, 10,000 MMBtu per contract
and Risk-adjusted Decision Making
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COMMON ABBREVIATIONS AND ACRONYMS
The following is a list of common abbreviations and acronyms that may appear on the ERP Examination.
RENEWABLE ENERGY
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ERP EXAM PART I
The broad areas of knowledge covered in readings related to crude oil markets and refined products include
the following:
1. Bradford, T. (2018). The Energy System: Technology, Economics, Markets, and Policy. Cambridge, MA:
The MIT Press.
• Chapter 14. Oil
2. Inkpen, A., and Moffett, M.H. (2011). The Global Oil and Gas Industry: Management, Strategy and
Finance. Tulsa, OK: PennWell Corp.
• Chapter 3. Access, Leasing, and Exploration
• Chapter 4. Developing Oil and Gas Projects
• Chapter 5. Production of Oil and Gas Products
4. Miesner, T.O., and Leffler, W.L. (2006). Oil & Gas Pipelines in Nontechnical Language. Tulsa, OK:
PennWell Corp.
• Chapter 4. Oil Pipeline Operations
• Chapter 10. Investment Decisions
6. Inkpen, A., and Moffett, M.H. (2011). The Global Oil and Gas Industry: Management, Strategy and
Finance. Tulsa, OK: PennWell Corp.
• Chapter 10. The Market for Crude Oil
• Chapter 12. Refining
9. Office of the Comptroller of the Currency. (March 2016). Oil and Gas Exploration and
Production Lending.*
10. Wright, C. (2017). Fundamentals of Oil and Gas Accounting, 6th Edition. Tulsa, OK: PennWell Corp.
• Chapter 15. Conveyances
• Chapter 17. Reserve Valuation
• Chapter 18. Accounting for International Petroleum Operations
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Natural Gas Markets and LNG Trends
PART I EXAM WEIGHT | 30%
The broad areas of knowledge covered in readings related to natural gas and LNG trends include the following:
NATURAL GAS
• Physical properties of natural gas
• Types of natural gas, units of measure, and heat content
• LNGs and condensates
• Global natural gas markets and economic fundamentals
• Market dynamics and pricing
• Gas sales agreements and trading
• Transportation and storage economics
LNG
• Market dynamics and pricing
• Contracts and shipping
• Project structuring and financing
• Trading
• Geographic trends
11. Rogers, H., and Stern, J. (December 2014). The Dynamics of a Liberalized European Gas Market –
Key Determinants of Hub Prices, and Roles and Risks of Major Players. Oxford Institute for
Energy Studies.*
12. Bradford, T. (2018). The Energy System: Technology, Economics, Markets, and Policy. Cambridge,
MA: The MIT Press.
• Chapter 18. Natural Gas
13. Le Fevre, C. (2013). Gas Storage in Great Britain. Oxford Institute for Energy Studies.*
14. Leffler, W. (2014). Natural Gas Liquids: A Non-Technical Guide. Tulsa, OK: PennWell Corp.
• Chapter 6. Refineries and the Unnatural Gas Liquids
• Chapter 7. Logistics
15. Lassander, R., and Swindle, G. (2018). Natural Gas Trading in North America. Princeton, NJ: Scoville
Risk Partners.
• Chapter 8. Basis Markets
• Chapter 3. Natural Gas Markets
16. Griffin, P. (Ed.). (2017). Liquefied Natural Gas: The Law and Business of LNG. Surrey, UK: Globe Law
and Business Ltd.
• Structuring LNG Projects
17. Tusiani, M.D., and Shearer, G. (2016). LNG: Fuel for a Changing World – A Nontechnical Guide, 2nd
Edition. Tulsa, OK: PennWell Corp.
• Chapter 13. Upstream Gas Supply Agreements
• Chapter 14. LNG Sale and Purchase Agreements
18. Griffin, P. (Ed.). (2017). Liquefied Natural Gas: The Law and Business of LNG. Surrey, UK: Globe Law
and Business Ltd.
• LNG Shipping
• LNG Trading
• Financing LNG Projects
• Portfolio LNG
• US LNG and the Global Market
19. Fulwood, M. (May 2018). Asian LNG Trading Hubs: Myth or Reality. Columbia University, The Center
on Global Energy Policy.*
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Renewable Energy
PART I EXAM WEIGHT | 10%
The broad areas of knowledge covered in readings related to renewable energy include the following:
20. Bradford, T. (2018). The Energy System; Technology, Economics, Markets, and Policy. Cambridge,
MA: The MIT Press.
• Chapter 8. Renewable Electricity
• Chapter 9. Electricity Demand Management
• Chapter 10. Electric Storage
• Chapter 11. Distributed Generation
• Chapter 15. New Fuels: Biofuels
21. Parsons, J.E. (2019). Introduction to Electricity Markets. Jersey City, NJ: GARP.
• Chapter 9. Emissions Markets
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Electricity Markets and Coal
PART I EXAM WEIGHT | 30%
The broad areas of knowledge covered in readings related to electricity markets and coal include
the following:
ELECTRICITY
• Physical properties of electricity
• Types of power generation (fossil fuel and renewable)
• Transmission and distribution
• Electricity market economics
• Base load, mid-merit, peak, and off-peak generation
• Capacity factor, heat rate, and spark spread
• Market data and price discovery
• Investing in generating capacity
• Electric energy markets and trading
• Power pools (ISOs and RTOs) and bilateral trading
• Contracts and structured solutions for energy markets
• Liberalized (deregulated) wholesale power market design
• Energy markets (day-ahead vs. real-time) and balancing markets
• Energy only vs. capacity markets
• Ancillary services
• Integration of renewable energy
• Global electricity markets and economic fundamentals
COAL
• Physical properties of coal
• Types of coal, units of measure, and heat content
• Benchmarks, contract specifications, and trading
• Global coal markets and economic fundamentals
• Transportation
22. Bradford, T. (2018). The Energy System; Technology, Economics, Markets, and Policy. Cambridge,
MA: The MIT Press.
• Chapter 6. Coal, Oil, and Gas for Electricity
23. Schernikau, L. (2016). Economics of the International Coal Trade: Why Coal Continues to Power the
World. 2nd Edition. Springer International Publishing.
• Chapter 7. Global Coal Trade — Derivatives, Price Drivers, and More
24. Parsons, J.E. (2019). Introduction to Electricity Markets. Jersey City, NJ: GARP.
• Chapter 1. Industry Overview
• Chapter 2. Load
• Chapter 3. Generation
• Chapter 4. Transmission
• Chapter 5. Economic Optimization of the System
• Chapter 6. Bilateral Contracts and Trading
• Chapter 7. Centralized Markets for Energy
• Chapter 8. Other Electricity Markets
25. Weron, R. (2006). Modeling and Forecasting Electricity Loads and Prices. West Sussex, England:
John Wiley & Sons Ltd.
• Chapter 1. Complex Electricity Markets
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ERP EXAM PART II
Market Risk
PART II EXAM WEIGHT | 20%
The broad areas of knowledge covered in readings related to market risk include the following:
26. Miller, M. (2013). Mathematics and Statistics for Financial Risk Management, 2nd Edition. Hoboken,
NJ: John Wiley & Sons, Inc.
• Chapter 2. Probabilities
• Chapter 3. Basic Statistics
• Chapter 4. Distributions
• Chapter 10. Linear Regression Analysis
27. Hull, J.C. (2018). Risk Management and Financial Institutions, 5th Edition. Hoboken, NJ: John Wiley &
Sons, Inc.
• Chapter 8. How Traders Manage Their Risks
28. Clewlow, L., and Strickland, C. (2000). Energy Derivatives: Pricing and Risk Management. Sydney,
Australia: Lacima Publications.
• Chapter 2. Understanding and Analyzing Spot Prices
• Chapter 3. Volatility Estimation in Energy Markets
• Chapter 10. Value-at-Risk
29. Hull, J.C. (2018). Risk Management and Financial Institutions, 5th Edition. Hoboken, NJ: John Wiley &
Sons, Inc.
• Chapter 25. Model Risk Management
30. Weron, R. (2006). Modeling and Forecasting Electricity Loads and Prices. West Sussex, England:
John Wiley & Sons Ltd.
• Chapter 2. Stylized Facts of Electricity Loads and Prices
• Chapter 3. Modeling and Forecasting Electricity Loads
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Credit Risk and Liquidity Risk
PART II EXAM WEIGHT | 30%
The broad areas of knowledge covered in readings related to credit risk and liquidity risk include the following:
LIQUIDITY RISK
• Liquidity risk management
• Liquidity stress testing
• Contingency funding planning
31. Burger, M., Graeber, B., and Schindlmayr, G. (2014). Managing Energy Risk: An Integrated View on
Power and Other Energy Markets, 2nd Edition. West Sussex, UK: John Wiley and Sons Ltd.
• Chapter 3. Risk Management
32. Gregory, J. (2014). Central Counterparties. West Sussex, UK: John Wiley & Sons Ltd.
• Chapter 2. Exchanges, OTC Derivatives, DPCs and SPVs
• Chapter 3. Basic Principles of Central Clearing
33. Gregory, J. (2015). The xVA Challenge: Counterparty Credit Risk, Funding, Collateral and Capital,
3rd Edition. West Sussex, UK: John Wiley & Sons Ltd.
• Chapter 4. Counterparty Risk
• Chapter 5. Netting, Close-Out, and Related Aspects
• Chapter 6. Collateral
• Chapter 7. Credit Exposure and Funding
• Chapter 14. Credit Value Adjustment
• Chapter 17. Wrong-Way Risk
34. Damodaran, A. (July 2019). Country Risk Determinants, Measures and Implications – 2019 Edition.*
35. Hull, J.C. (2018). Risk Management and Financial Institutions, 5th Edition. Hoboken, NJ: John Wiley &
Sons, Inc.
• Chapter 24. Liquidity Risk
36. Venkat, S., and Baird, S. (2016). Liquidity Risk Management – A Practitioner’s Perspective. Hoboken,
NJ: John Wiley & Sons, Inc.
• Chapter 3. Liquidity Stress Testing
• Chapter 7. Contingency Funding Planning
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Financial Energy Products
PART II EXAM WEIGHT | 30%
The broad areas of knowledge covered in readings related to financial energy products include the following:
37. Marest, L., and Errera, S. (2018). Fundamentals of Trading Energy Futures & Options, 3rd Edition.
Tulsa, OK: PennWell Corp.
• Chapter 12. Option Valuation
• Chapter 13. Energy Options Strategies
• Chapter 15. History and Growth of Derivatives Markets
38. Hickey, D. (Ed.). (2016). Oil and Gas Trading: A Practical Guide. Surrey, UK: Globe Law and
Business Ltd.
• Hedging and Derivatives
39. Mack, I.M. (2014). Energy Trading and Risk Management. Singapore: John Wiley & Sons Singapore
Pte. Ltd.
• Chapter 3. Plain Vanilla Energy Derivatives
• Chapter 4. Exotic Energy Derivatives
• Chapter 6. Illustrations of Hedging with Energy Derivatives
• Chapter 9. Hedging Nonlinear Payoffs Using Options
40. Lassander, R., and Swindle, G. (2018). Natural Gas Trading in North America. Princeton, NJ: Scoville
Risk Partners.
• Chapter 8. Basis Markets
42. Lassander, R., and Swindle, G. (2018). Natural Gas Trading in North America. Princeton, NJ: Scoville
Risk Partners.
• Chapter 6. Price Level Trading
43. Swindle, G. (2014). Valuation and Risk Management in Energy Markets. Cambridge University Press.
• Chapter 2. Forwards and Carry
44. Simkins, B.J., and Simkins, R.E. (Eds.). (2013). Energy Finance and Economics: Analysis and
Valuation, Risk Management, and the Future of Energy. Hoboken, NJ: John Wiley & Sons, Inc.
• Chapter 11. Real Options and Applications in the Energy Industry
45. Lassander, R., and Swindle, G. (2018). Natural Gas Trading in North America. Princeton, NJ: Scoville
Risk Partners.
• Chapter 7. Time Spreads
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Risk Governance, Enterprise Risk Management,
and Risk-Adjusted Decision Making
PART II EXAM WEIGHT | 20%
The broad areas of knowledge covered in readings related to risk governance, enterprise risk management,
and risk-adjusted decision making include the following:
46. Lam, J. (2017). Implementing Enterprise Risk Management – From Methods to Applications.
Hoboken, NJ: John Wiley & Sons, Inc.
• Chapter 7. The ERM Framework
• Chapter 12. Risk Appetite Statement
• Chapter 13. Risk Control Self-Assessments
• Chapter 15. Strategic Risk Management
47. Crouhy, M., Galai, D., and Mark, R. (2014). The Essentials of Risk Management, 2nd Edition. New York,
NY: McGraw-Hill Education.
• Chapter 17. Risk Capital Attribution and Risk-Adjusted Performance Measurement
48. Chapelle, A. (2019). Operational Risk Management. West Sussex, UK: John Wiley & Sons, Ltd.
• Chapter 9. Operational Risk Governance
• Chapter 14. Key Risk Indicators
• Chapter 17. Project Risk Management
49. Fraser, J., Simkins, B., and Narvaez, K. (Eds.). (2015). Implementing Enterprise Risk Management:
Case Studies and Best Practices. Hoboken, NJ: John Wiley & Sons, Inc.
• Chapter 20. Implementing Risk Management within Middle Eastern Oil and Gas Companies
50. Simkins, B., and Simkins, R.E. (Eds.). (2013). Energy Finance and Economics: Analysis and Valuation,
Risk Management, and the Future of Energy. Hoboken, NJ: John Wiley & Sons, Inc.
• Chapter 9. Financial Statement Analysis for Oil and Gas Companies
51. International Risk Governance Council (IRGC). (2015). IRGC Guidelines for Emerging
Risk Governance.*
52. SPE International. (2016). SPE Technical Report: Guidance for Decision Quality for Multicompany
Upstream Projects.*
53. World Energy Council. (2016). World Energy Perspectives: The Road to Resilience 2016 - Managing
Cyber Risks.*
54. Spetzler, C., Winter, H., & Meyer, J. (2016). Decision Quality: Value Creation from Better Business
Decisions. Hoboken, NJ: John Wiley & Sons, Inc.
• Chapter 14. The Amoco Unleaded Gasoline Decision — Decision Quality
55. Society of Actuaries. (2018). Managing Climate and Carbon Risk in Investment Portfolios.*
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2020 Energy Oversight Committee
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