A Scottish Enterprise feasibility story will look into private and public sector funding and access the cost and scale of the project.
Sir Ian's vision would see the re-positioning of the new Peacock Visual Arts Contemporary Arts Centre.
However a less ambitious alternative plan would include the arts centre.
Sir Ian said: "The goal is to give Aberdeen a vibrant new heart to reflect both the success of the region and its position as a leading Northern European city.
"The vision is transformational - a street-level square with the very large space over the Denburn Road and railway covered in.
"I see this as the 'people's' square with something for everyone, and how that square will be developed, both above and below ground, is open to public debate."
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He added: "This development is of significant regional, national and international importance and will be a clear statement of Scotland's ambition in the energy industry worldwide."
A Peacock Visual Arts spokesperson welcomed investment in the city centre but said Sir Ian Wood's announcement puts the current Contemporary Arts Centre development in jeopardy.
"A delay in proceeding with Peacock's project will likely mean that we will lose our design team, architect and campaign team. There would be immediate redundancies at Peacock. Our funding package is time-limited and we must use it or lose it.
"It is unlikely that the project could be revived should Sir Ian's feasibility study introduce further delays into the process. We have written to Sir Ian to explain the challenges that his scheme and its timescale present to us."
First Minister Alex Salmond said: "I look forward to seeing the outcome of the feasibility study.
"It strikes me that in these tough economic times there is all the more reason to think big for the future of the north east of Scotland.
"We should be excited by the scale of his vision and his commitment to ensure great things can be made to happen."
Aberdeen City Council leader Councillor Kate Dean said the regeneration of Union Terrace Gardens has been seriously considered in the past - but for the first time there is the prospect of significant private sector financing, which has never been on the table before.
(GK/JM)
