2011 Erp Aim Statements

8/3/2019 2011 Erp Aim Statements

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2011 ERP

Examination

AIM Statements


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2011 Energy Risk Professional (ERP) Examination AIM Statements

2011 Global Association of Risk Professionals. All rights reserved. 1

INTRODUCTION

The Study Guide sets forth primary and secondary topics covering physical energy assets,operations, and financial energy markets; as well as the techniques used to manage risk in

each. New for 2011 is the Current Issues in Energy Section. Recognizing the dynamic nature

of the energy markets we added the current issues section to familiarize ERP candidates

with new developments and issues that are likely to have a long-term impact on the global

energy markets. The topics selected in conjunction with the Energy Oversight Committee

(EOC) reflect those that practicing energy risk professionals should master. All topics are

reviewed annually to ensure the ERP Examination remains timely and relevant.

The Applying Instructional Materials Statements (AIMS) are designed to serve as an addi-

tional study resource only and will not in and of themselves fully prepare a candidate for the

ERP Examination. They should be used as guidance and support for the readings outlined

in the Study Guide to help identify key learning objectives for each core reading.

Recognizing the dynamicnature of the energy markets

we added the current issues

section to familiarize ERP

candidates with new devel-

opments and issues that are

likely to have a long-term

impact on the global energy

markets.

Test Weights and Question Allocation for the 2011 ERP Examination

Physical Energy Markets

Petroleum 15% 27 questions

Gas 10% 18 questions

Electricity Production and Distribution 10% 18 questions

Renewables and Carbon Emissions 5% 9 questions

Section Total 40% 72 questions

Financial Markets

Financial Products and Valuation 20% 36 questions

Modeling and Valuing Energy Transactions 15% 27 questions

Risk Management Techniques 15% 27 questions

Section Total 50% 90 questions

Current Issues in Energy 10% 18 questions

Exam Total 100% 180 questions


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2 2011 Global Association of Risk Professionals. All rights reserved.


PHYSICAL ENERGY ASSETSExam Weight | 40%

Petroleum27 Questions

1.1 Exploration and Production

1. Charles F. Conaway. The Petroleum Industry: A Nontechnical Guide (Tulsa, OK: PennWell Books, 1999).

Chapter 2..................... ..Petroleum Origins and Accumulation

2. Institut Franais du Petrol Publications. Oil, Gas Exploration, and Production: Reserves, Costs, Contracts

(Paris: Editions Technip, 2007).

Chapter 3... ....................Hydrocarbon Reserves

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

Chapter 1. ..................... ..Upstream Oil & Gas Operations

AIMS:Charles F. Conaway. The Petroleum Industry: A Nontechnical Guide

Chapter 2...........................Petroleum Origins and Accumulation

Understand the fundamentals of petroleum chemistry

Understand how petroleum accumulates in reservoirs

Understand reservoir properties

Be able to describe migration and entrapment

Institut Franais du Petrol Publications. Oil, Gas Exploration, and Production: Reserves, Costs, Contracts

Chapter 3 ..........................Hydrocarbon Reserves

Understand concepts related to reserves and how probabilities are used in discussing reserves

Discuss the difference between conventional and nonconventional hydrocarbons

Discuss Hubberts theory of decline (a.k.a. peak theory)

Discuss the impact of technical progress on the production profile

Charlotte Wright & Rebecca Gallun. Fundamentals of Oil & Gas Accounting

Chapter 1 ...........................Upstream Oil & Gas Operations

Know the difference between integrated and independent oil companies

Understand exploration methods, particularly geological and geophysical (G&G) techniques

Discuss mineral rights and interests, particularly hydrocarbon ownership regimes

Explain the difference between the acquisition and leasing of rights for exploration and production

Understand the technical aspects of drilling operations

Know the stages in the recovery process for hydrocarbons

Demonstrate understanding of the offset clause, royalty payments and other lease provisions

1.2 Crude Oil

1. Norman J. Hyne. Nontechnical Guide to Petroleum Geology, Exploration, Drilling, and Production, 2nd Edition

(Tulsa, OK: PennWell Books, 2001).

Chapter 1 ..................... ...Nature of Gas and Oil (sections titled: Petroleum, Chemical Composition, and Crude Oil)

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

Chapter 1. ..................... ..How Pipelines Differ

Chapter 10................... ..Investment Decisions

Chapter 12 ................... ..Engineering and DesignStorage


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3. Samuel Van Vactor. Introduction to the Global Oil and Gas Business (Tulsa, OK: PennWell Books, 2010).

Chapter 3... ....................Oil Pricing

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

Available online: http://www.purvingertz.com/userfiles/products/PurvinGertz_WTI_Benchmark_Study.pdf

AIMS:

Norman J. Hyne. Nontechnical Guide to Petroleum Geology, Exploration, Drilling, and Production

Chapter 1 ...........................Nature of Gas and Oil, sections titled Petroleum, Chemical Composition, and Crude Oil

List the general chemical composition of crude oil and natural gas

Understand the relationship of American Petroleum Institute (API) ratings and sulfur content in determining

the grade of crude oil

Discuss the characteristics of benchmark crude oils

Understand the refining process, including cracking

List the percent yield of byproducts from crude oil refining

Discuss the different units of measure for crude oil and natural gas

Understand differences between the reservoir classifications of: black oil, volatile oil, retrograde gas, wet gas,

and dry gas

Thomas O. Miesner and William L. Leffler. Oil and Gas Pipelines in Nontechnical Language

Chapter 1 ...........................How Pipelines Differ

List the different types of crude oil and natural gas pipelines

Distinguish differences between crude oil and refined products pipelines

Discuss the process for moving natural gas from the well-head to pipeline customers

Discuss the types of pipeline customers for crude oil and natural gas

Chapter 10.........................Investment Decisions

Understand the history associated with the pipeline construction

Explain the decision process for building a pipeline

Define: demand-driven, supply-driven, and market-driven scenarios for developing pipelines

Discuss the economics of approving and building a pipeline

Explain the common methods of setting pipeline rates (the cost paid by shippers per unit of transport)

Discuss reasons why a party may want to sell or acquire a pipeline

Chapter 12 .........................Engineering and DesignPipelines and Storage

Understand the basics of and key considerations for building a pipeline:

Safety

Route

Line size, wall thickness, looping Pumps, compressors and prime mover

Flow and pressure control

Number of and location of stations

Storage

Understand the need for station locations along pipeline routes

Discuss the importance of different types of storage, including factors like location, seasonality

Understand barriers to pipeline design and construction


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Samuel Van Vactor. Introduction to the Global Oil and Gas Business

Chapter 3 ..........................Oil Pricing

Discuss OPECs role in setting global oil prices Know the history of the spot market and its impact on setting oil prices

Be able to discuss the role of benchmark crudes; know the differences between major benchmark crudes and

how they are used around the world

Understand the linkage between the physical product and futures trading

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

Understand the major historical events that shaped the crude oil market and the establishment of a global

pricing mechanism for crude oil

Discuss the Cushing Hubits role and its limitations

Explain the function of netback pricing and its market impact

Understand the relationship between futures and physical markets

Define the term parity pricing, understand parity relationships

Know the role geography plays in establishing a price for oil

1.3 Refined Petroleum Products

1. James H. Gary, Glenn E. Handwerk and Mark. J Kaiser. Petroleum Refining: Technology and Economics,

5th Edition (New York: CRC Press, 2007).

Chapter 1. ..................... ..Introduction (through section 1.8)

Chapter 14.3..................Economics and Planning Applications

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

Chapter 20....................Simple and Complex Refineries

AIMS:

James H. Gary, Glenn E. Handwerk and Mark J Kaiser. Petroleum Refining: Technology and Economics, 5th Edition

Chapter 1 ...........................Introduction (thru 1.8)

Describe refinery processes and operations; list the commodities produced through the refining process

Understand determinants in the pricing structure of refined petroleum products (commodities); highlight the

supply and demand for refined petroleum products worldwide

Describe the technology behind each oil refining process; understand global industry structure and key players

Discuss global statistics relating to refinery output, configuration, and investment patterns

Understand the concept of refinery complexity; outline key oil refinery economics factors

Chapter 14.3 .....................Economics and Planning Applications

Understand the use of linear programming in solving refinery production problems

Describe the use of the reference oil method to evaluate crude oil purchases Describe the planning process for operations, shutdown, and environmental issues

William L. Leffler. Petroleum Refining in Nontechnical Language, 3rd Edition

Chapter 20........................Simple and Complex Refineries

Discuss the operating characteristics of a simple and complex refinery

Outline how supply and demand impacts prices of varies qualities of crude oil

Describe how crude oil prices are established; including how complex refineries increase their operating

margin by refining heavy crude oil


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1.4 Synthetics

1. 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).Available online: http://www.rand.org/pubs/technical_reports/2008/RAND_TR580.pdf

Chapter 4................. ......Oil Sands and Synthetic Crude Oil

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). Available online: http://www.rand.org/pubs/monographs/MG754

Chapter 3... ....................Coal-to-Liquids Technologies

Chapter 6.......... .............Critical Policy Issues for Coal-to-Liquids Development

AIMS:

Michael Toman, Aimee E. Curtright, David S. Ortiz, Joel Darmstadter, Brian Shannon. Unconventional

Fossil-Based Fuels: Economic and Environmental Trade-Offs

Chapter 4 ..........................Oil Sands and Synthetic Crude Oil

Describe the products that bitumen is used to produce

Describe the geographical locations and production estimates of bitumen

Discuss methods of extraction from oil sands including potential constraints on the various extraction

methods, production, and uses of oil sands (e.g., competition and environmental)

Understand the economic relationships between synthetics, conventional oil and natural gas

James T. Bartis, Frank A. Camm and David S. Ortiz. Producing Liquid Fuels from Coal: Prospects and Policy Issues

Chapter 3 ..........................Coal-to-Liquids Technologies

Explain the Fischer-Tropsch process and products produced from the conversion of coal to liquids (i.e., diesel,

jet fuel, naphtha)

Explain environmental issues associated with coal-derived liquid fuels as well as solutions (i.e., sequestration

and other methods)

Discuss potential commercial development of coal-to-liquid technologies

Chapter 6 ..........................Critical Policy Issues for Coal-to-Liquids Development

Discuss the environmental impacts of coal-to-liquids production

Describe the commercial development potential and limitations of CTL

Natural Gas and LNG18 Questions

2.1 Natural Gas

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

Chapter 2.1.....................Natural Gas2. Rebecca L. Busby. Natural Gas in Nontechnical Language (Tulsa, OK: PennWell Books, 1999).

Chapter 8...... .................Regulatory History of the Gas Industry

3. Arthur J. Kidnay and William R. Parrish. Fundamentals of Natural Gas Processing (Boca Raton, FL: Taylor

and Francis, 2006).

Chapter 12 .................. ...Transportation and Storage

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

Chapter 36 ....................The Natural Gas Market in the United Kingdom


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AIMS:

Davis W. Edwards. Energy Trading and Investing

Chapter 2.1 ........................Natural Gas

Know the standard heat/volumetric measurements for natural gas

Define the terms hub, citygate, basis price

Know how natural gas is traded; understand common types of natural gas trades including various spread trades

Explain the term basis price and know the factors used to set the basis price

Understand the Henry Hubs role in setting the basis price for natural gas trades

Discuss the spot/forward price relationship in the natural gas market

Rebecca L. Busby. Natural Gas in Nontechnical Language

Chapter 8 ..........................Regulatory History of the Gas Industry

List the basic missions of a public utility

Discuss the various United States Federal Legislative Acts that impacted gas and electric utility development Discuss the responsibilities of state regulatory commissions

Arthur J. Kidnay and William R. Parrish. Fundamentals of Natural Gas Processing

Chapter 12 .........................Transportation and Storage

Understand market choices that affect the transportation and storage of natural gas

Discuss the three types of underground storage (aquifers, depleted fields, and salt caverns) and their operation

Describe the transportation of various liquid products; including the difference between transporting natural

gas and petroleum liquids

Frank Fabozzi (ed.). The Handbook of Commodity Investing

Chapter 36........................The Natural Gas Market in the United Kingdom

Understand the relationship between natural gas and other commodities, including cross-commodity correlations

Define the national balancing point and how it is used

Explain the basics of the physical natural gas market

Explain the basics of the financial natural gas market in the UK

Understand how gas is traded in the UK

Define the role risk and volatility play in the natural gas market

Identify the price drivers in the UK natural gas market

2.2 LNG

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

Available online: http://fossil.energy.gov/programs/oilgas/publications/lng/LNG_primerupd.pdf

2. Michael D. Tusiani and Gordon Shearer. LNG: A Nontechnical Guide (Tulsa, OK: PennWell Books, 1999).

Chapter 1........................The Liquefied Natural Gas Industry

Chapter 3.......................The LNG Chain: The Project Nature of the LNG Business

Chapter 11 ......................The Economics of an LNG Project


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AIMS:

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

Be familiar with global flows in the LNG market and the main LNG exporting countries Understand the role of regulation in the LNG industry and be prepared to explain the citing process for an

LNG facility

Know how an LNG train operates

Explain how LNG is used for peak shaving

Know standard LNG units of measure and heating values

Explain the role of the LNG spot market in setting global prices and how it has developed

Michael D. Tusiani and Gordon Shearer. LNG: A Nontechnical Guide

Chapter 1 ...........................The Liquefied Natural Gas Industry

Describe the history of natural gas and LNG and the importance of the development of the LNG market

Describe the advantages of natural gas as compared to coal Discuss how the general types of pipelines are used

List and describe the essential facets of an LNG project, contrast methods of monetizing natural gas resources

(local market, LNG, pipeline, gas-to-liquids, and compressed natural gas)

Chapter 3 ..........................The LNG Chain: The Project Nature of the LNG Business

Discuss the LNG Value Chain: upstream, liquefaction, transportation, and re-gasification and the typical costs

associated with each element

Discuss how the costs for each element in the value chain have changed over time, various methods of cost

reduction, and value generation

Understand the sources of value along the LNG value chain

Chapter 11..........................The Economics of an LNG Project

Discuss the cost differences between an LNG project and a typical crude oil project

Discuss the range of costs in upstream production and pipeline construction and their dependence on

wellhead location

Discuss the role of liquids in the economics of an LNG project

Understand the determinants of shipping costs

Electricity Production and Distribution18 Questions

3.1 Electric


Chapter 2.2 ...................Electricity

2. Chris Harris. Electricity Markets: Pricing, Structures and Economics (West Sussex, England: John Wiley &

Sons, 2006).

Chapter 6.......... .............Power Capacity

Chapter 7..................... ..Location

3. Sally Hunt. Making Competition Work in Electricity(New York: John Wiley & Sons, Inc., 2002).

Chapter 2..................... ..The Essential Aspects of Electricity

Chapter 8...... .................Details of the Integrated Trading Model

4. Richard Baxter. Energy Storage: A Nontechnical Guide (Tulsa, OK: PennWell Books, 2006).

Chapter 4................. ......Applications


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AIMS:


Chapter 2.2.......................Electricity

Discuss standard market design

Describe how the marginal producer sets rates

Understand how regional electricity markets operate and the role of the TSO/RTO/ISO in market operations

Explain when a generator would be activated out-of-merit-order

Define the terms nodes, zones and, hubs

Discuss how congestion affects price

Explain how a day-ahead market operates

Define heat rate and spark spread and explain how each is used to set market prices

Understand base-load and its impact on market pricing

Chris Harris. Electricity Markets: Pricing, Structures and EconomicsChapter 6 ..........................Power Capacity

Understand elements of electric generation capacity

Understand basic economics of power generationthe power stack

Discuss modeling of generation capacity (fixed cost and marginal cost, etc.)

Describe the effect of the capacity option on power plant optimization

Describe how price caps impact capacity and prices

Chapter 7...........................Location

Describe why locational issues are important for electrical systems; list the requirements for locational charging

Understand losses and how losses are modeled

Define constraint

Understand nodal pricing and the role of financial transmission rights

Sally Hunt. Making Competition Work in Electricity

Chapter 2...........................The Essential Aspects of Electricity

Describe generation, transmission, wholesale and distribution and their interconnectedness

Describe the concept of competition and list the main associated risks

State the four technical truths of electricity

Define daily load curve and state why it is important

Chapter 8 ..........................Details of the Integrated Trading Model

Discuss how supply and demand factors set the spot price

Contrast demand bidding, capacity payments, and capacity obligations

Describe the impact of demand response

Understand the role forward contracts play in risk management

Define congestion management and calculate congestion costs

Discuss how day-ahead markets operate and how contracts are scheduled in the PJM (Pennsylvania,

New Jersey, Maryland) market


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Richard Baxter. Energy Storage: A Nontechnical Guide

Chapter 4 ..........................Applications

Explain how each term of energy storage (short/medium/long) affects market prices Understand how energy storage systems can be used for commodity arbitrage

Understand the principles of energy management, including peak shaving

Know the major types of energy storage devices

Understand the operation of a pumped hydro storage facility

Explain the factors that affect the ownership costs of storage devices

3.2 Coal

1. James T. Bartis, Frank A. Camm and David S. Ortiz. Producing Liquid Fuels from Coal: Prospects and Policy

Issues (Santa Monica, CA: Rand, 2008). Available online: http://www.rand.org/pubs/monographs/MG754

Chapter 2..................... ..The Coal Resource Base

AIMS:

James T. Bartis, Frank A. Camm and David S. Ortiz. Producing Liquid Fuels from Coal: Prospects and Policy Issues

Chapter 2...........................The Coal Resource Base

State the countries with the most significant coal reserves

List the three key factors impacting production

Describe the different types of coal

Compare the worlds coal reserves to that of petroleum reserves

3.3 Nuclear and Hydroelectric

1. Roy L. Nersesian. Energy for the 21st Century: A Comprehensive Guide to Conventional and Alternative Sources

(Armonk, NY: M.E. Sharpe, Inc., 2007).

Chapter 8....... ................Nuclear and Hydropower

2. Ann Chambers. Renewable Energy in Nontechnical Language (Tulsa, OK: PennWell Books, 2006).

Chapter 6.......... .............Hydroelectric

AIMS:

Roy L. Nersesian. Energy for the 21st Century: A Comprehensive Guide to Conventional and Alternative Sources

Chapter 8 ..........................Nuclear and Hydropower

Discuss the advantages of nuclear power generation

Be familiar with the different types of nuclear reactor design, their usage and advantages/disadvantages

Discuss the advantages and disadvantages of hydropower

List the nations with the greatest reliance on hydropower

Ann Chambers. Renewable Energy in Nontechnical Language

Chapter 6 ..........................Hydroelectric

Know hydropowers share of the worlds energy markets, identify major hydro installations around the world

Be able to explain the basic mechanics of a hydropower plant

Understand the major regulations regarding hydropower

Discuss the environmental issues surrounding the construction and operation of hydropower plants

Be familiar with the two case studies cited in the chapter (Hawaii and Brazil) and understand their impact

on the market


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Renewables and Carbon Emissions9 Questions

4.1 Renewables

1. Fisher Investments. Fisher Investments on Energy(Hoboken, NJ: John Wiley & Sons, 2009).

Chapter 6.......... .............Alternative Energy

2. Roy L. Nersesian. Energy for the 21st Century: A Comprehensive Guide to Conventional and Alternative Sources

(Armonk, NY: M.E. Sharpe, Inc., 2007).

Chapter 3... ....................Biomass

Chapter 9.......... .............Sustainable Energy

AIMS:

Fisher Investments. Fisher Investments on Energy

Chapter 6 ..........................Alternative Energy

Define alternative energy Discuss the sources of renewable energy

Discuss the investment drivers behind renewable energy investments

Roy L. Nersesian. Energy for the 21st Century: A Comprehensive Guide to Conventional and Alternative Sources

Chapter 3 ..........................Biomass

Define biomass and understand its uses and limitations

Discuss where biomass is generally used

Discuss and compare ethanol production in Brazil and the United States and ethanols use as a vehicle fuel

in Brazil

Define biogas and discuss its uses

Chapter 9 ..........................Sustainable Energy

Compare conventional energy production to sustainable energy production

List and discuss the pros and cons of the major types of sustainable energy

Explain how financial incentives impact renewable (sustainable) energy

Discuss the relationship between sustainable energy and economic development

4.2 Carbon Finance and Emissions

1. Tom James and Peter Fusaro. Energy and Emissions Markets: Collision or Convergence?(Singapore. John Wiley

& Sons (Asia) Pte Ltd., 2006).

Chapter 3... ....................Green Trading Schemes

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

Chapter 37.....................Emissions Trading in the European Union

AIMS:

Tom James and Peter Fusaro. Energy and Emissions Markets: Collision or Convergence?

Chapter 3 ..........................Green Trading Schemes

Understand the major sources of greenhouse gases in the European Union

Calculate a simple example of how emission trading can save money for participants

Discuss SO2, NOx, and CO2 emissions

Define negawatts


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Chapter 37 ........................Emissions Trading in the European Union

Understand what a National Allocation Plan (NAP) is and how it affects emissions trading Explain the objectives of the Kyoto Protocol

Describe how price and volume risk interact to impact the EU emissions market

Understand how emissions allowances work and how they reduce greenhouse gas emissions

Discuss the economics of emissions allowances, how they are priced, traded and how products are used

Describe how the forward price is established in the EU emissions market

FINANCIAL MARKETSExam Weight | 50%

Financial Products and Valuation36 Questions

5.1 Commodity Forwards and Futures

1. Steven Errera and Stewart L. Brown. Fundamentals of Trading Energy Futures & Options, 2nd Edition


Chapter 3... ....................Behavior of Commodity Futures Prices

2. Robert McDonald. Derivatives Markets (Boston: Addison-Wesley, 2003).

Chapter 6.......... .............Commodity Forwards and Futures

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

Chapter 5... ....................Relationship Between Risk Premium and Convenience Yield Models

AIMS:

Steven Errera and Stewart L. Brown. Fundamentals of Trading Energy Futures & Options, 2nd Edition

Chapter 3 ..........................Behavior of Commodity Futures Prices

Explain the principles of parallelism and convergence

Discuss full carry

Explain the terms backwardation and contango

Explain cash management arbitrage, calculate an example of cash/futures arbitrage

Understand the concept of and calculate an example of basis

Robert McDonald. Derivatives Markets

Chapter 6 ..........................Commodity Forwards and Futures

Describe how to create a synthetic commodity position and use it to explain the relationship between the

forward price and the expected future spot price

Explain the effect non-storability has on electric prices Derive the basic equilibrium formula for pricing commodity forwards and futures

Describe an arbitrage transaction in commodity forwards and futures, compute the potential arbitrage profit

Explain the impact storage costs and convenience yields have on commodity forward pricing and

no-arbitrage bounds

Compute the forward price of a commodity with storage costs

Compare the lease rate with the convenience yield

Explain how basis risk can occur when hedging commodity price exposure


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Chapter 5 ..........................Relationship Between Risk Premium and Convenience Yield Models

Understand the difference between commodities and financial assets Explain the role of arbitrage in setting futures prices of financial assets

Define and differentiate risk premium and convenience yield models

Understand the relationship and interpret the term structure of commodity prices, risk premium and

convenience yield models

Calculate futures returns using the risk premium and convenience yield models

Understand the relationship between roll yield and risk premium

5.2 Energy Derivatives

1. 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 2..................... ..Energy Derivatives

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

Chapter 1. ..................... ..Energy Swaps

Chapter 2..................... ..Energy Options

Chapter 3... ....................Energy Exotic Options

3. Alexander Eydeland and Krzysztof Wolyniec. Energy and Power Risk Management: New Developments in

Modeling, Pricing, and Hedging (Hoboken, NJ: John Wiley & Sons, 2003).

Chapter 8....... ................Structured Products: Fuels and Other Commodities

4. Steven Errera and Stewart L. Brown. Fundamentals of Trading Energy Futures & Options, 2nd Edition


Chapter 4................. ......Speculation and Spread Trading

Chapter 7..................... ..Energy Options Strategies

AIMS:

Markus Burger, Bernhard Graeber, and Gero Schindlmayr. Managing Energy Risk: An Integrated View on Power

and Other Energy Markets

Chapter 2...........................Energy Derivatives

Explain how to use a forward contract for hedging

Calculate the fair value of a forward contract and the fair value of a commodity swap

Understand and calculate the profit and payoff profiles for plain vanilla options

Understand differences between European, American, and Asian options

Know how to price spot price options

Understand, describe, and calculate put-call parity

Vincent Kaminski (ed). Managing Energy Price Risk

Chapter 1 ...........................Energy Swaps

Understand how swap positions are impacted by price changes

Describe the pricing and profit/loss profiles of different types of swaps

Discuss the major users of swaps and their objectives in using swaps for project finance and risk mitigation

Understand issues surrounding liquidity


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Chapter 2...........................Energy Options

Explain the relationship between options and swaps

Define, discuss and list applications of the Greeks Work through a delta hedge example

Understand and discuss the volatility smile

Compare and contrast standard options, participation collars and swap participations, bull and bear spreads,

and swaptions

Chapter 3 ..........................Energy Exotic Options

Define exotic options and differentiate them from plain vanilla options

Differentiate the following option valuation methods: Monte Carlo (simulation), bi-/multi-nomial trees,

finite-difference/numerical integration

Discuss how commodity prices differ from stock prices

Calculate an option premium using a binomial tree

Discuss these option structures and their application: Asian, barrier, spread, exchange, basket, compound, digital

Alexander Eydeland and Krzysztof Wolyniec. Energy and Power Risk Management: New Developments in

Modeling, Pricing, and Hedging

Chapter 8 ..........................Structured Products: Fuels and Other Commodities

Construct a zero cost collar based on calls and puts

Discuss the impact on structured product pricing of storage, convenience yield and transmission constraints

Calculate the forward value of storage

Discuss and contrast load-serving contracts (i.e., full requirements, interruptible, banded hourly shaped energy,

block power, and fixed shape)

Steven Errera and Stewart L. Brown. Fundamentals of Trading Energy Futures & Options, 2nd Edition

Chapter 4 ..........................Speculation and Spread Trading

Explain the beneficial role of speculation in establishing derivative prices

Calculate the position a trader would take when they believe that the spread on two commodities is too wide

Understand the concept of inter-market spreads and how they are used

Discuss the role of the crack spread in trading commodities, explain why a trader would take a particular

position in a crack spread

Discuss the spark spread and its role in power markets

Chapter 7...........................Energy Options Strategies

Calculate the payoff on at-the-money/out ofthemoney call and put options

Understand the use and calculation of a payoff on a bull spread, bear spread, butterfly spread, long straddle,

and short straddle

Explain the use of caps, floors, and collars in hedging transactions Understand the structure and calculate the cash flows associated with commodity price hedging strategies

Discuss the use of bull, bear, and crack spread options


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5.3 Electricity Products

1. Vincent Kaminski (ed). Energy Modeling: Advances in the Management of Uncertainty, 2nd Edition

(Incisive Media Investments Limited, 2005). Chapter 2..................... ..Fundamentals of Electricity Derivatives


Chapter 4.3 ...................Tolling Agreements

Chapter 4.4...... .............Wheeling Power

AIMS:

Vincent Kaminski (ed). Energy Modeling: Advances in the Management of Uncertainty, 2nd Edition

Chapter 2...........................Fundamentals of Electricity Derivatives

Discuss the implication of the non-storage of electricity on pricing spot price power options

Describe how the use of futures and forwards is a solution for valuing power options

Explain the risk in using daily forwards to hedge daily positions


Chapter 4.3 .......................Tolling Agreements

What is the role of a power marketer?

Understand why deregulation has made tolling agreements more popular

Perform a net profit calculation

Explain the risk management exposure of a tolling agreement

Discuss the pricing of tolling agreements / Explain the impact of volatility on tolling agreements

Define dispatch rate

Understand the risks in using options to approximate physical behaviors

Chapter 4.4.......................Wheeling Power

Explain the purpose of wheeling power and the various types of wheeling trades

Understand the nature of electricity and how it flows over a network

Discuss the technical issues associated with the long-distance transmission of electricity

Understand the difference between spread trades and wheeling trades

5.4 Natural Gas Products

1. Fletcher J. Sturm. Trading Natural Gas: A Nontechnical Guide (Tulsa, OK: PennWell Books, 1997).

Chapter 4................. ......Hedging and Trading Instruments

AIMS:

Fletcher J. Sturm. Trading Natural Gas: A Nontechnical Guide

Chapter 4 ..........................Hedging and Trading Instruments Discuss the buying and selling of natural gas, its related terms and specifications

Understand the process of hedging a natural gas swap with futures contracts

Describe and calculate the profitability of a futures position at settlement

Understand the role of indexes in pricing

For index swaps, calculate payoffs for sale and purchase positions

Discuss trading applications for fixed-floating index swaps

Discuss the use of swing swaps and provide examples of payoffs given different spot price scenarios

Define exchange of futures for physical (EFP) and discuss how EFPs are used

Discuss triggers and contrast with EFPs


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Modeling and Valuing Energy Transactions27 Questions

6.1 Intro to Energy Modeling

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

Chapter 2..................... ..What Makes Energies So Different?

Chapter 3... ....................Modeling Principles and Market Behavior

AIMS:

Dragana Pilipovic. Energy Risk: Valuing and Managing Energy Derivatives, 2nd Edition

Chapter 2...........................What Makes Energies So Different?

Discuss why energy products are harder to model than financial products

Describe the impact of supply and demand drivers on energy prices

State why regulation, illiquidity, and decentralized markets make energy and financial markets different

Provide an example of energy basis risk


Chapter 3 ..........................Modeling Principles and Market Behavior

Describe the ideal modeling process

Know the role assumptions play in market models

Understand market variables vs. modeling parameters

Know how the price of an underlying asset is established

Understand modeling terms, issues and their usage

Define the cost of risk

Understand the difference between lognormal and mean-reverting markets

Be familiar with lessons learned from the money markets

6.2 Essential Statistics


Chapter 4................. ......Essential Statistical Tools

AIMS:


Chapter 4 ..........................Essential Statistical Tools

Explain the importance of and tools used in time series analysis, distribution analysis

Understand the moments of a distribution

Discuss and contrast the normal and lognormal distributions

Explain the use of the Q-Q plot, the autocorrelation test, mean-squared and R-squared error

6.3 Spot Price Modeling


Chapter 5... ....................Spot Price Behavior

2. Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management(London: Lacima

Publications, 2000).

Chapter 6.......... .............Spot Price Models and Pricing Standard Instruments


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AIMS:


Chapter 5 ..........................Spot Price Behavior

Describe the difference between single-factor and mean-reverting models

Understand the role of volatility in single-factor models

Calculate the Black-equivalent volatility over time

Calibrate parameters using time series analysis

Discuss how locational marginal pricing works in electricity markets

Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management

Chapter 6 ..........................Spot Price Models and Pricing Standard Instruments

Compare and contrast single factor, two factor, and three factor models

Discuss two factor model curves and the deficiencies of a single factor model

Explain the different volatility assumptions used in the single factor and two factor models Discuss the key considerations in selection of a pricing model for pricing standard derivative instruments

6.4 Forward Price Modeling


Chapter 6.......... .............The Forward Price Curve

Chapter 7..................... ..Building Marked-to-Market Forward Price Curves

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

(West Sussex, England: John Wiley & Sons, 2008).

Chapter 2..................... ..Forward Curve Modeling in Commodity Markets

AIMS:


Chapter 6 ..........................The Forward Price Curve

Explain the characteristics of contango and backwardation

Explain the role of seasonality in electricity, oil, and natural gas forward curves

Discuss and explain the concepts of the arbitrage-free condition and convenience yield as they relate to the

electricity markets

Model a forward price based on spot price and other general assumptions

Chapter 7...........................Building Marked-to-Market Forward Price Curves: Implementing Forward Price Models

Define a marked-to-market forward price curve

Understand the fundamentals of forward price contracts and valuation

Understand the assumptions used in the construction of a forward price curve for a single delivery date versus

a price curve for delivery over a period of time

Calculate a future month forward price based on the current months forward price

Explain the step-function process for adjusting annual forward prices to monthly forward prices

Contrast the various methodologies used to estimate seasonality

Discuss the process used to build forward price curves in basis markets


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

Chapter 2...........................Forward Curve Modeling in Commodity Markets

Discuss the factors that shape commodity forward curves Contrast the forward curve for seasonal and nonseasonal commodities

State the purpose of Principal Components Analysis (PCA)

Provide an interpretation of a change in level, slope, and curvature in a PCA

6.5 Volatility Estimation

1. Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management(London: Lacima


Chapter 3... ....................Volatility Estimation in Energy Markets


Chapter 8....... ................Volatilities

AIMS:


Chapter 3 ..........................Volatility Estimation in Energy Markets

Discuss the weaknesses in using Geometric Brownian Motion (GBM) to forecast commodity prices

Calculate volatility from historical data and understand the advantages of natural logs

Calculate the scaling of volatility for different time periods

Understand how the volatility assumption for a mean-reverting process is different than a non-mean-

reverting process

Understand and apply the terms: volatility smile, homoskedastic, heteroskedastic, leptokurtic, ARCH and GARCH


Chapter 8 ..........................Volatilities

Define volatility as it relates to variance

Calculate the average long-term volatility from shorter-term volatilities

Derive market-implied volatilities for one option or a series of options

Understand how volatility smiles are created

Discuss the relationship between volatility and time-to-delivery for forward contracts assuming a single-factor

mean-reverting model

6.6 Modeling Energy Price Behavior

1. Alexander Eydeland and Krzysztof Wolyniec. Energy and Power Risk Management: New Developments in

Modeling, Pricing, and Hedging (Hoboken, NJ: John Wiley & Sons, 2003).

Chapter 4................. ......Reduced-form Processes


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AIMS:

Alexander Eydeland and Krzysztof Wolyniec. Energy and Power Risk Management: New Developments in

Modeling, Pricing, and HedgingChapter 4 ..........................Reduced-form Processes

Discuss the steps required for determining a price process

Explain potential problems and solutions for model parameters

Discuss the challenges associated with mean-reversion when developing spot and forward prices

Explain the role of convenience yield and storage with regard to pricing commodity contracts

Understand the necessary volatility adjustments for use in option pricing models

Describe how to modify Geometric Brownian Motion (GBM) models for mean reversion and seasonality;

discuss the pros and cons of using GBM

Discuss modeling price spikes with jump-diffusion models, including pros and cons

6.7 Modeling Electricity Price Behavior1. Markus Burger, Bernhard Graeber, and Gero Schindlmayr. Managing Energy Risk: An Integrated View on Power


Chapter 4.......................Fundamental Market Models


Chapter 4.1 ....................Spatial Load Forecasting

AIMS:


and Other Energy Markets.

Chapter 4 ..........................Fundamental Market Models

Discuss and understand the fundamental supply and demand factors that drive prices in the electricity markets

Discuss the economics that drive dispatch decisions in the power markets

Understand the role of variable operating costs in plant dispatch, including idle time, start-up costs,

constraints, and ways to model these variables

Discuss merit order dispatch curves and the major considerations for bidding a plant for next day commitment

Compare and contrast how single and multiple region market models function

Understand the information required to develop a model for the electricity markets (supply, demand, and

transmission)

Explain the supply and demand assumptions associated with natural gas market models


Chapter 4.1........................Spatial Load Forecasting

Know the factors that go into producing a load forecast

Define base load power

Understand the relationship between weather and electricity consumption

Know the steps in creating and testing a load forecasting model


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Risk Management Techniques27 Questions

7.1 Overview of Energy Risks

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

Chapter 3.......................Different Kinds of Risk

2. John Wengler. Managing Energy Risk: A Nontechnical Guide to Markets and Trading (Tulsa, OK: PennWell Books, 2001).

Chapter 6.......... .............Energy Risk Boot Camp: Must Know Concepts for Managers and Directors

3. Tom James and Peter Fusaro. Energy and Emissions Markets: Collision or Convergence?(Singapore.

John Wiley & Sons (Asia) Pte Ltd., 2006).

Chapter 10................... ..What Risk? An Introduction to Managing Risk

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

Chapter 8.......................Wider Risk Management Questions

AIMS:Peter C. Beutel. Surviving Energy Prices

Chapter 3 ..........................Different Kinds of Risk

Define the following : Price Risk, Basis Risk, Supply Risk, Volume Risk

Provide examples of each type of risk and strategies for mitigating them

Understand how to hedge a customer contract using puts, calls, or futures

John Wengler. Managing Energy Risk: A Nontechnical Guide to Markets and Trading

Chapter 6 ..........................Energy Risk Boot Camp: Must Know Concepts for Managers and Directors

Discuss the tenets of the five minute risk manager

Describe the pricerisk pyramid

Discuss the difference between a forward price and an expected spot price

Explain the key elements in constructing a forward price curve

Discuss the difference between historical and implied volatility

Explain the role of correlation in modeling energy prices


Chapter 10.........................What Risk? An Introduction to Managing Risk

Discuss the structure of a risk matrix

Discuss each major type of risk

Identify and assess the major types of basis risk

Steve Leppard. Energy Risk Management: A Non-technical Introduction to Energy Derivatives

Chapter 8 ..........................Wider Risk Management Questions

Calculate the cost of unwinding a hedge

Discuss mark-to-market and market risk techniques

Calculate an example of MVaR (Market Value-at-Risk) and Delta-Gamma approximation

Describe physical risk management

Discuss the risk matrix approach to risk analysis

Discuss some key risks (market, accounting, credit, force majeure, data, reputational)


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7.2 Operational Risk

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

Chapter 15 .....................Operational Risk and its Management

AIMS:

Tom James. Energy Markets: Price Risk Management and Trading

Chapter 15 .........................Operational Risk and its Management

Describe a typical derivatives transaction

List and discuss the five steps for assessing and controlling risk

Understand the differences between: risk reduction, risk control, risk containment and risk transfer

7.3 Risk Management Controls


Chapter 10.....................Management Controls

2. Tom James and Peter Fusaro. Energy and Emissions Markets: Collision or Convergence?(Singapore.

John Wiley & Sons (Asia) Pte Ltd., 2006).

Chapter 11 ......................Risk-Policy Guidelines

AIMS:


Chapter 10.........................Management Controls

Understand the five broad categories of control breakdowns

Describe the key components of a sound risk management or trading policy

Discuss the key contents in a risk policy document

Describe the role of a back-office system; understand the role of external and internal auditors


Chapter 11 ..........................Risk-Policy Guidelines

State the key steps in developing a risk-policy statement

Understand the general types of hedging positions

Discuss a framework for monitoring and managing energy-market risks, including trading controls and

position limits

7.4 Value-at-Risk (VaR)

1. Markus Burger, Bernhard Graeber, and Gero Schindlmayr. Managing Energy Risk: An Integrated View on Power


Chapter 6.2 ...................Value-at-Risk and Further Risk Measures2. Alessandro Mauro. Price Risk Management in the Energy Industry: The Value at Risk Approach, Proceedings

of the XXII Annual International Conference of the International Association for Energy Economics

(June 9-12, 1999). Available online: http://ssrn.com/abstract=1020917


22/27



AIMS:


and Other Energy MarketsChapter 6.2 .......................Value-at-Risk and Further Risk Measures

Understand Value-at-Risk (VaR), including the strengths and weaknesses in its application

Contrast the following methods used to calculate VaR: historical simulation, analytical, and structured Monte

Carlo method

Calculate volatility and correlation required to use the analytic method of VaR measurement

Understand the role of backtesting in relation to VaR models

Compare and discuss: cashflow-at-risk, earnings-at-risk, and profit-at-risk

Describe settlement risk and replacement risk

Alessandro Mauro. Price Risk Management in the Energy Industry: The Value at Risk Approach, Proceedings of

the XXII Annual International Conference of the International Association for Energy Economics (June 9-12, 1999) Calculate the VaR for a single asset and for a portfolio of assets

Use VaR to understand the potential maximum downside risk for a portfolio of commodity positions

Understand the conditions in various commodity markets that lead to logical use of VaR as a risk measure

7.5 Hedging Physical Assets


Chapter 13 ................... ..Energy-Market Hedging Scenarios

2. Steve Leppard. Energy Risk Management: A Non-technical Introduction to Energy Derivatives (London:

Risk Books, 2005).

Chapter 4................. ......Physical Transactions and Basic Hedging Instruments

AIMS:


Chapter 13 .........................Energy-Market Hedging Scenarios

Compare the use of fixed-price swap with a collar structure for end-use hedging

Calculate the settlement of a monthly fixed-price swap and a collar structure

Understand the challenges faced by an electric power generator when hedging in the coal and natural

gas markets

Compare and contrast the various hedging strategies used to mitigate risk in long and short energy

market positions.

Steve Leppard. Energy Risk Management: A Non-technical Introduction to Energy Derivatives

Chapter 4 ..........................Physical Transactions and Basic Hedging Instruments

Explain the roles and risk exposures confronted by producers, transformers, and off-takers

Evaluate the mark to market value of a swap over time

Calculate the cash and physical commodity flows associated with various energy swap structures

Understand the application of fixed-for-floating swaps


23/27



7.6 Hedging Financial Assets


Chapter 6.......... .............Options Trading and Hedging Application Strategies2. Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management(London: Lacima


Chapter 9.......... .............Risk Management of Energy Derivatives

AIMS:


Chapter 6 ..........................Options Trading and Hedging Application Strategies

Discuss option contract terminology

Demonstrate the use of simple option strategies to offset underlying price movements

Use payoff charts to demonstrate strategies for hedging long and short energy positions

Understand various volatility trading strategies


Chapter 9 ..........................Risk Management of Energy Derivatives

Understand why a delta hedge becomes less effective as the price of the underlying asset changes from its

original value

Calculate the profiles of delta, gamma, and vega hedges

Describe hedging strategies for call and put positions using long or short trading strategies

Understand volatility risk and discuss hedging techniques to manage its impact on portfolio returns

7.7 Hedge Accounting


Chapter 17 ................... ..Accounting for Energy Derivatives Trades

AIMS:


Chapter 17 .........................Accounting for Energy Derivatives Trades

Discuss the key aspects of FAS 133

Define effectiveness test, highly effective hedge, and financial instrument according to IAS 32

Define what a hedge is under IAS 39

Explain the steps for establishing hedge accounting

7.8 Managing Credit Risk

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

Chapter 6.3 ...................Risk Management (Credit Risk)


Chapter 16 .................. ...A Practical Guide to Credit Control and Risk-Mitigation Methods

3. Vincent Kaminski (ed). Energy Modeling: Advances in the Management of Uncertainty(London: Risk Books, 2005).

Chapter 12 .................. ...Credit Risk Management for the Energy IndustrySome Perspectives

4. Eduardo Canabarro and Darrell Duffie.ALM of Financial Institutions, ed. Leo Tilman (London: Euromoney, 2003).

Chapter 9.......... .............Measuring and Marking Counterparty Risk


24/27



AIMS:


and Other Energy MarketsChapter 6.3 .......................Risk Management (Credit Risk)

Describe methods for quantifying and managing (reducing) credit risk exposure

Understand external credit ratings and interpret related default probabilities

Discuss internal rating factors


Chapter 16.........................A Practical Guide to Credit Control and Risk-Mitigation Methods

Compare methods for managing credit-risk exposure

Understand the use of collateralization

Explain how credit default swaps can be used to manage credit risk

Vincent Kaminski (ed). Energy Modeling: Advances in the Management of Uncertainty

Chapter 12 .........................Credit Risk Management for the Energy IndustrySome Perspectives

Explain the advantages of a clearing house and related margining arrangements

Understand the high-level steps for measuring credit risk

Canabarro and Duffie. ALM of Financial Institutions

Chapter 9 ..........................Measuring and Marking Counterparty Risk

Define terms related to counterparty risk

Explain the process for using a Monte Carlo simulation to model potential counterparty exposure and discuss

considerations for applying such a model

Describe how a credit valuation adjustment is made to an over-the-counter derivatives portfolio

Define a risk-neutral mean loss rate

Describe the procedures for computing the market value of credit risk when one or both counterparties in the

derivatives transaction has credit exposure

Current Issues in EnergyExam Weight | 10%

NOTE ON THE CURRENT ISSUES IN ENERGY SECTION: GARP recognizes that energy markets are dynamic and are often affected

by regulation, newly discovered reserves and technology breakthroughs. Global energy risk managers must remain abreast of these

developments to effectively manage risk in their businesses. With this goal in mind, GARP is introducing a new Current Issues in

Energy section for the 2011 ERP Examination. The Current Issues section is designed to familiarize ERP candidates with new devel-

opments and issues that are likely to have a long-term impact on the global energy markets. Topics included in the Current Issues

section of the 2011 ERP Examination include Dodd-Frank regulation and its potential impact on energy firms, an introduction to the

Smart Grid, analysis of the 2008 oil price shock and an overview of modern shale gas development. While three of the four topics

focus specifically on the United States, they address topics that will affect energy markets globally; ERP Candidates should consider

this impact when reviewing the material and preparing for the exam. Each reading is current as of November 15, 2010 and candidates

can expect to be tested on the information throughout 2011. Subsequent developments in these topics, or any new areas of focus, will

be captured on the 2012 ERP Examination.


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Readings for Current Issues in Energy18 Questions

1. Skadden, Energy Derivatives Under the Dodd-Frank Act, (July 2010).

Available online: http://www.skadden.com/Index.cfm?contentID=51&itemID=2171

2. Sidley Austin, The Dodd-Frank Acts Effect on Hedging Activities of Energy Companies and Large Energy Consumers

Available online: http://www.sidley.com/SidleyUpdates/Detail.aspx?news=4622

Be able to identify and discuss the potential impacts that implementation of Dodd-Frank will have on the energy

industry

3. US Department of Energy, The Smart Grid: An Introduction

Available online: http://www.oe.energy.gov/DocumentsandMedia/DOE_SG_Book_Single_Pages(1).pdf

Be able to define the basic elements of a Smart Grid

Understand the impact the development of the smart grid will have on electricity supplies and pricingmethodologies

Define real time pricing

Discuss the role of decentralization in creating the Smart Grid

4. Global Public Policy Institute, The 2008 Oil Price Shock

Available online: http://www.gppi.net/fileadmin/gppi/GPPiPP1_Oil_Prices_2009.pdf

Be knowledgeable about the price swings in the oil market in 2008 and the arguments for why they occurred

Understand the factors that led to a tightening of supply in the oil market in 2008

Discuss the role speculation played in the price spike; contrast market speculation with hedging for risk mitigation

purposes

Understand the effect the price shock had in influencing legislation and regulation of the commodity sector

5. ALL Consulting Report, An Overview of Modern Shale Gas Development in the United States

Available online: http://www.all-llc.com/publicdownloads/ALLShaleOverviewFINAL.pdf

Define shale gas, understand how shale gas deposits are different from conventional natural gas reserves

Explain how shale gas is becoming a price driver within the natural gas industry

Understand the concept of hydraulic fracturing (fracking); know the environmental concerns associated with

this technique

Be familiar with the development and history of the shale gas sector


26/27

2011 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 .................... .........Vice President and Chief Risk Officer, BlueStar Energy Services


27/27

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About GARP | The Global Association of Risk Professionals (GARP) is a not-for-profit global membership organization dedicated to

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ment practitioners and researchers from banks, investment management firms, government agencies, academic institutions, and

corporations from more than 195 countries. 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 risk management via

comprehensive professional education and training for professionals of all levels. www.garp.org.