Geologist Tapping Wind Power

My Father Thought I Was Wacko

Fred Gallagher was born with a petroleum geology pedigree. His father, Jack Gallagher, started Dome Petroleum Ltd. in 1950, and grew it into one of Canada's largest oil and gas companies known for exploring Arctic waters and shooting from the hip.

In 1990, at the height of his 10-year career as a petroleum geologist with Amoco -- he was a "whiz kid" in the corporate office where he represented three of Amoco's six worldwide divisions -- Gallagher junior took a sabbatical, completed a master's of business degree in Switzerland and never returned to the patch.

Today, Gallagher heads up Calgary-based Vision Quest Windelectric Inc., a division of TransAlta Energy Corp. and the largest wind producer in Canada.

"I had a fabulous view of what was going on in the world," Gallagher said of his exploration days at Amoco. "But Amoco was in harvest mode -- they were financially engineering and grooming themselves for a take-over, and cutting the heart out of the company in terms of exploration."

During his MBA studies, Gallagher discovered that most enterprises regard their products as tools of the business, and manage their products' maturation cycles. In comparison, "the oil and gas industry saw itself as a one product business," he concluded. "There was a whole element of the energy business that the oil and gas sector didn't even perceive."

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Fred Gallagher was born with a petroleum geology pedigree. His father, Jack Gallagher, started Dome Petroleum Ltd. in 1950, and grew it into one of Canada's largest oil and gas companies known for exploring Arctic waters and shooting from the hip.

In 1990, at the height of his 10-year career as a petroleum geologist with Amoco -- he was a "whiz kid" in the corporate office where he represented three of Amoco's six worldwide divisions -- Gallagher junior took a sabbatical, completed a master's of business degree in Switzerland and never returned to the patch.

Today, Gallagher heads up Calgary-based Vision Quest Windelectric Inc., a division of TransAlta Energy Corp. and the largest wind producer in Canada.

"I had a fabulous view of what was going on in the world," Gallagher said of his exploration days at Amoco. "But Amoco was in harvest mode -- they were financially engineering and grooming themselves for a take-over, and cutting the heart out of the company in terms of exploration."

During his MBA studies, Gallagher discovered that most enterprises regard their products as tools of the business, and manage their products' maturation cycles. In comparison, "the oil and gas industry saw itself as a one product business," he concluded. "There was a whole element of the energy business that the oil and gas sector didn't even perceive."

A few years of post-MBA research in Europe -- combined with his skill set honed in the oil and gas industry -- led Gallagher to wind energy, which he believed would play a growing role in the world's emerging and deregulated energy markets. Alberta's energy market was deregulated during the late 1990s.

A 'Resource Business'

In 1992, there were 3,000 megawatts of wind power globally; today that number has ballooned to 47,000 megawatts of total installed capacity worldwide, with an annual growth rate of between 30 to 40 percent. During the past three years, Canada's wind power capacity has tripled to almost 450 megawatts of installed capacity. The Government of Canada has developed tax incentives to see national capacity grow an additional 4,000 megawatts by 2012.

Gallagher returned to his roots in Alberta -- where he had developed "a local currency" -- and got to work harnessing the winds that blow from the Rocky Mountains, across the foothills of southern Alberta.

"It's a remarkable resource compared to other parts of the world," said Gallagher, the managing director and CEO of Vision Quest. Vision Quest operates five wind farms in southern Alberta, producing 189 megawatts, or enough power for 68,000 homes -- that's the equivalent of reducing carbon dioxide emissions into the atmosphere by 580,000 tons annually, taking 121,000 cars off the road or planting 290,000 trees.

Gallagher adopted one business model from the oil and gas sector: "Build, own and operate your corporate assets." The new generation of wind turbines each cost on the order of several million dollars.

"It's the largest rotating machinery in the world," he said. The swept area -- the diameter defined by the outer tips of the blades -- is equivalent to two regulation football fields, back to back. Each blade is longer than the wing of a Boeing 747 jet.

Gallagher's 83-year-old father was present at the commissioning of Vision Quest's first wind turbine in November 1997.

"Until that time," Gallagher said, "my father thought I was wacko."

For Gallagher senior, the 50-meter-tall turbine symbolized the emergence of this new energy industry. The son quoted him saying: "I get it -- this is where I was in 1950 when I created Dome Petroleum."

Technology Is the Driver

Justin Thompson, Vision Quest's business development manager, said technological advances are driving the pace of development.

"Just as the oil and gas industry's technology has evolved into 3-D seismic imaging and horizontal drilling, we're capturing different winds, and we're going higher," he said. "There's a critical mass of players in the wind industry, from an exploration standpoint. Good wind resources in Canada are going to be converted to energy."

Ross Keating is the president of Canadian Hydro Developers, a Calgary-based energy company that specializes in producing power from biomass, hydro and wind. Canadian Hydro has taken advantage of exploration tax credits -- fashioned after Canada's oil and gas industry -- to raise capital for the construction of exploration wind turbines.

At its Sinnot Wind Farm, located in the southern Alberta foothills near Pincher Creek, Canadian Hydro has constructed five R&D wind turbines at a cost of $10 C million. In order to qualify for tax credits -- the 100 percent tax write-off flows through to individual investors -- the R&D wind turbines were spaced one kilometer apart.

According to Keating, Canadian Hydro has plans for an infill program to develop a wind farm -- the original five R&D turbines will form the end arrays of the proposed wind farm.

The skyline of southern Alberta is dotted with wind turbines operated by Canadian Hydro and Vision Quest. A DEG-sponsored pre-convention renewable energy trip on June 18 will visit the sites, situated side by side, to observe the evolution of technologies being used to harness the wind.

"You can see 10 years of progress in the wind industry, all in one location," Keating said. "It's a living lab."