Remembering My Exam Preparations For The Energy Risk Professional In 2010

On a break from work in my neighborhood Starbucks I notice a student with a pile of books  on the coffee table in front of him. With a sense of accomplishment I think to myself: “That was me one year ago.” Hydrocarbon chemistry, oil exploration, CTL technology, and all the other fun topics required in the ERP curriculum had taken the better of me then. Ah, the good days.

While it was very enjoyable to learn something new from scratch, the huge amount of study material was a bit overwhelming. The fact that I had started about two months too late for my schedule to be relaxed exacerbated the situation. In hindsight, if I did it again, I would certainly start at least six months before the actual exam, just to have enough time for review and solving practice exams.

My study strategy also left a lot to be desired: As I had learned in university, I read all the required material in the GARP curriculum while taking notes first that I later revised and practiced. With this old school approach, I needed a lot of time just to get through the original readings. I also had to travel a lot for work, which took out extra time from my study plan that I did not have in the first place. I would have helped me a lot had I been in the review stage already at this point.

Luckily, I was able to take off five days before the ERP exam. This made up for lost time a bit and enabled me to thoroughly solve the one available practice exam and go through all of my materials. My exam location was somewhat convenient (UCLA Los Angeles), but I still wanted to know where exactly I needed to go for the exam. This was a good decision as it helped me arrive relaxed at the test center on the test day. The actual exam was a bit of a blur; I was surprised about the ambiguity of the questions. In the practice exam this was not the case, so you should prepare to really know the material inside out.

How happy was I when I received the email from GARP in January of 2011 that I had passed the ERP exam. Surprisingly, I had cleared almost all of the topics in the upper band, so my study strategy had been successful after all. I could have saved some time in my preparation had I been organized a bit more. Starting earlier would have been a big relief also.

You will be in the exact same situation after you have taken the exam. Good luck and all the best for your ERP exam preparation!

Related posts:

  1. What is the ERP Exam
  2. Energy Risk Professional required readings (GARP)
  3. How will the ERP help me in my career?

Required Readings for the Energy Risk Professional (ERP) Exam

The required readings for the ERP exam are directly available from GARP in printed or electronic form. The price tag is rather high though, so you may want to consider assembling the readings yourself, preferably from your university library, as they will be exactly the same. The books may also be available on Amazon, but the price including shipping to your country may again be quite high.

In either case, finding all the books is very cumbersome, so I went ahead and compiled a list of required readings that can be used to substitute or complement the GARP study package.

A word of warning: The required reading list for the ERP exam looks extremely daunting. In reality, you will only have to read 2-3 chapters from each book on average, so it pans out to about 2,000 pages in total. I think candidates will benefit immensely from organizing the reading material properly, which is the main reason I made the ViveraRISK ERP Concept Checkers available on this site.

Below you will find a list of all the books from the ERP Study Guide 2011 published by GARP that can be found on their website. Please verify that all the titles are complete, as I can not guarantee that I have not missed or misspelled one.

As always, please contact me with any questions. I wish you all the best for your ERP exam preparations!

Printed books that you may find in your library or on Amazon:

  • Charles F. Conaway. The Petroleum Industry: A Nontechnical Guide (Tulsa, OK: PennWell Books, 1999)
  • Institut Français du Petrolé Publications. Oil, Gas Exploration, and Production: Reserves, Costs, Contracts (Paris: Editions Technip, 2007)
  • Charlotte Wright & Rebecca Gallun. Fundamentals of Oil & Gas Accounting, 5th Edition (Tulsa, OK: PennWell, 2008)
  • Norman J. Hyne. Nontechnical Guide to Petroleum Geology, Exploration, Drilling, and Production, 2nd Edition (Tulsa, OK: PennWell Books, 2001)
  • Thomas O. Miesner and William L. Leffler. Oil and Gas Pipelines in Nontechnical Language (Tulsa, OK: PennWell Books, 2006)
  • Samuel Van Vactor. Introduction to the Global Oil and Gas Business (Tulsa, OK: PennWell Books, 2010)
  • James H. Gary, Glenn E. Handwerk and Mark. J Kaiser. Petroleum Refining: Technology and Economics, 5th Edition (New York: CRC Press, 2007)
  • Davis W. Edwards. Energy Trading and Investing (New York: McGraw-Hill, 2010)
  • Rebecca L. Busby. Natural Gas in Nontechnical Language (Tulsa, OK: PennWell Books, 1999)
  • Arthur J. Kidnay and William R. Parrish. Fundamentals of Natural Gas Processing (Boca Raton, FL: Taylor and Francis, 2006)
  • Frank Fabozzi (ed.): The Handbook of Commodity Investing (Hoboken, NJ: John Wiley & Sons, 2008)
  • Michael D. Tusiani and Gordon Shearer. LNG: A Nontechnical Guide (Tulsa, OK: PennWell Books, 1999)
  • Davis W. Edwards. Energy Trading and Investing (New York: McGraw-Hill, 2010)
  • Chris Harris. Electricity Markets: Pricing, Structures and Economics (West Sussex, England: John Wiley & Sons, 2006)
  • Sally Hunt. Making Competition Work in Electricity (New York: John Wiley & Sons, Inc., 2002)
  • Richard Baxter. Energy Storage: A Nontechnical Guide (Tulsa, OK: PennWell Books, 2006)
  • Roy L. Nersesian. Energy for the 21st Century: A Comprehensive Guide to Conventional and Alternative Sources (Armonk, NY: M.E. Sharpe, Inc., 2007)
  • Ann Chambers. Renewable Energy in Nontechnical Language (Tulsa, OK: PennWell Books, 2006)
  • Fisher Investments. Fisher Investments on Energy (Hoboken, NJ: John Wiley & Sons, 2009)
  • Tom James and Peter Fusaro. Energy and Emissions Markets: Collision or Convergence? (Singapore. John Wiley & Sons (Asia) Pte Ltd., 2006)
  • Frank Fabozzi (ed.): The Handbook of Commodity Investing (Hoboken, NJ: John Wiley & Sons, 2008)
  • Steven Errera and Stewart L. Brown. Fundamentals of Trading Energy Futures & Options, 2nd Edition (Tulsa, OK: PennWell Books, 2002)
  • Robert McDonald. Derivatives Markets (Boston: Addison-Wesley, 2003)
  • 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)
  • Vincent Kaminski (ed). Managing Energy Price Risk (London: Risk Books, 2004)
  • Alexander Eydeland and Krzysztof Wolyniec. Energy and Power Risk Management: New Developments in Modeling, Pricing, and Hedging (Hoboken, NJ: John Wiley & Sons, 2003)
  • Vincent Kaminski (ed). Energy Modeling: Advances in the Management of Uncertainty, 2nd Edition (Incisive Media Investments Limited, 2005)
  • Davis W. Edwards. Energy Trading and Investing (New York: McGraw-Hill, 2010)
  • Fletcher J. Sturm. Trading Natural Gas: A Nontechnical Guide (Tulsa, OK: PennWell Books, 1997)
  • Dragana Pilipovic. Energy Risk: Valuing and Managing Energy Derivatives, 2nd Edition (New York: McGraw-Hill, 2007)
  • Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management (London: Lacima Publications, 2000)
  • Helyette Geman (ed). Risk Management in Commodity Markets: From Shipping to Agriculturals and Energy (West Sussex, England: John Wiley & Sons, 2008)
  • Peter C. Beutel. Surviving Energy Prices (Tulsa, OK: PennWell Books, 2005)
  • John Wengler. Managing Energy Risk: A Nontechnical Guide to Markets and Trading (Tulsa, OK: PennWell Books, 2001)
  • Tom James and Peter Fusaro. Energy and Emissions Markets: Collision or Convergence? (Singapore. John Wiley & Sons (Asia) Pte Ltd., 2006)
  • Steve Leppard. Energy Risk Management: A Non-technical Introduction to Energy Derivatives (London: Risk Books, 2005)
  • Tom James. Energy Markets: Price Risk Management and Trading (Singapore: John Wiley & Sons, 2008)
  • Eduardo Canabarro and Darrell Duffie. ALM of Financial Institutions, ed. Leo Tilman (London: Euromoney, 2003)

Readings available online as downloads:

Energy Risk Professional Survey

I hope you are all doing well in your ERP exam preparations! As you know, there is only a limited number of study material available, and I am currently thinking which products could help ERP candidates the most to successfully prepare for the exam. For this reason, I have created a brief survey with ten questions.

If you have a few minutes, please fill out the survey, this will help me prepare better learning material. As always, if you have any questions about the ERP exam, please feel free to contact me.

Here’s to you and your ERP success!

How To Master the ERP Exam in 10 Steps.

  1. Start preparing early, and finish early. I recommend you start reading the original study material at least 6 months before the exam. You may assemble the reading materials from the original publications instead of the GARP package. The material is exactly the same, with the exception that the GARP exam preparation package already has all the relevant chapters and papers bundled. If you do not mind to jump between chapters in a book and organizing published papers yourself, then you can find all the core readings on sites like Amazon or in your library. Make sure you have at least two months before the exam to review and solve practice questions.
  2. Take notes while reading. Instead of simply reading the textbooks you should take notes from the beginning. This will expedite your review process greatly. Memory consolidation only works if the information is repeatedly recalled (active recall), and reading alone will not make you remember the relevant concepts well enough for a challenging certification such as the ERP.
  3. Regularly review what you have learnt. Review your notes, diagrams, earmarked pages etc. every few days or at least every weekend. This will help you keep perspective and reinforce the most salient concepts.
  4. Explain to others what you have learnt. If you can, study together with other ERP candidates. This will make sense once you have read and summarized the core readings. Explain certain concepts to each other, or solve practice questions together. Who would not want to know how exactly nuclear energy works? Explain it to your parents or a patient neighbor. Discussing the concepts will greatly enhance your understanding and performance on exam day.
  5. Solve as many practice questions as possible. In order to drill the concepts, you must stimulate your brain. If it feels difficult, then it works and you are learning something. Try to find as many practice questions for the ERP exam, or if possible, enroll in a class to take a practice exam, such as the realistic ERP practice exam.
  6. Take a day off work before the exam. You should not go into overdrive right before the exam day. Take a day off, sleep enough, take a walk, or go swimming. Go to bed early and rise early. This will help you achieve peak performance during the exam.
  7. Research your exam center. Go there once before the exam, find out where parking is located, if the exam is taking place on a university campus, find out in which building it will be taken. I took the exam at UCLA. The campus is a maze stretching over several city blocks. There were no signs whatsoever. As it was early on a Saturday, there were almost no students around to ask for directions. Make sure you know where you have to be on exam day, and if you have questions, ask GARP early.
  8. Bring your own lunch. On the exam site, there may be a cafeteria, but you should bring your own lunch. You never know what they are serving, it may be crowded and you have to wait in line. Instead, prepare a healthy sandwich, find a quiet place and relax during the lunch break. Make sure you bring a beverage and snacks during the exam, as there is probably no drinking water provided in the exam room. The official statement is that there are no food or drinks allowed in the exam room, but of you quietly place a bottle of water on the floor next to your chair, nobody will complain.
  9. Do not engage in discussions about the curriculum before the exam. Save this for afterwards. The exam will be hard enough. You need all mental power you can muster, and you should not waste any energy discussing last minute questions right before the exam. This is why you should have a study group where all questions are cleared beforehand.
  10. Take it step by step during the exam. Time is usually not an issue. Solve question for question, and if you see something you did not anticipate, do not despair. Make a mark in your exam book on questions you are not certain about, and re-attempt them later. Do not leave any questions blank, always fill in an answer. You can always correct your answer later.

What Is The ERP Exam? What To Expect, And How To Prepare For It

The Energy Risk Professional (ERP) is a new professional designation from GARP aimed at risk professionals working in the physical and financial fields of energy. I was actually studying for the CAIA (Chartered Alternative Investment Analyst) and the CFA (Chartered Financial Analyst) when I became interested in energy risk management. It was intuitive to me to use energy financial instruments for risk management and hedging, but the physical aspects of the energy risk professional designation were not entirely clear to me. Still, I took the plunge and registered for the November exam in summer of 2010.

Little did I know what I had signed up for: The ERP curriculum stretched over nearly two thousand pages, consisted of over 100 readings different and academic papers, some of them very lengthy. Next to a 60 hour work week, the study material was a mountain of work. Organizing the material, summarizing it, reviewing and practicing for the exam were made even more difficult by the lack of study material and preparation resources, as only one (!) practice exam was available at the time.

The curriculum stretches from physical aspects of petroleum (hydrocarbon genesis, refining, transport with tankers, pipelines) over coal and natural gas, to alternative energy such as solar, hydro, wind, and biomass. There is also a segment of nuclear energy, financial trading instruments, valuation of energy transactions, financial disclosure, and laws and regulations. A large part of the material is electricity. The finance part was easy for me, as it covered mainly options, futures, forwards, swaps and little structured derivatives. Energy futures was a different bag altogether, but not too remote from what I already knew.

The physical aspects were much more interesting, as they contained ideas and concepts that were new to me. Even simple truths like the fact that electricity is not storable and what this means for trading electricity derivatives seem trite at first, but when you get into it further, it opens up a whole new universe.

My main challenge was reviewing and learning the study material. I had made a ton of summaries of the original readings, but how should I pack that into my head for the exam? I used a spaced repetition with my summaries in question and answer format, and that was quite effective (but not very efficient, as it ate a lot of time). In retrospect, I spent about 200 hours preparing for the exam, and passed. If this sounds like a lot, it was. There were simply no tools available at the time that I could have used for a shortcut.

If you work in the energy industry, and are involved with risk management, I encourage you to look into the Energy Risk Professional (ERP) from GARP. This designation is new, but I believe it will grow tremendously in importance over the next few years, and has the potential to help you in your career. I wish you all the best for your exam preparation!