April 28 (Bloomberg) -- Archer Daniels Midland Co., the world's largest maker of ethanol, appointed former Chevron Corp. executive Patricia Woertz as chief executive officer as the agricultural company rushes to expand its energy unit.

Woertz, 53, who retired as Chevron's head of oil-refining and fuel marketing last month, will become the first woman to run the agricultural company in its 104-year history, Decatur, Illinois-based Archer Daniels Midland said today in a statement. She replaces G. Allen Andreas, 62, who will remain chairman.

ADM, a processor soybeans, corn and cocoa, gets about 23 percent of its profit from a unit that makes ethanol, a gasoline additive made from corn. ADM plans to expand ethanol output by 45 percent in the next two years as prices rally and President George W. Bush seeks to boost consumption of alternative fuels.

``I'm not going in with any strong ideas'' about turning ADM into an energy company, Woertz said in a phone interview. ADM ``will try to bring the energy pieces together'' with the other commodity-based businesses, she said.

At San Ramon, California-based Chevron, the second-largest U.S. oil company, Woertz was in charge of $2.15 billion in annual spending on plant expansions and equipment, and she led a restructuring of the refining unit after the acquisition of Texaco. During more than four years as head of Chevron's global refining, Woertz boosted oil-processing capacity by 45 percent and fuel sales by 80 percent, company filing showed.

Top Energy Executive

``She's always been on our list as one of the top energy company executives,'' said Eric Nielsen, managing director of the Houston office of executive search firm Korn Ferry International. ``She was one of the leading contenders to be CEO of Chevron. We were surprised when she left.''

Woertz's hiring ``has sent a message that its future lies in products surrounding energy, based on agricultural technology,'' Merrill Lynch & Co. analyst Leonard Teitelbaum said today in a note to clients.

``It would appear that the board has concluded it would be easier to teach an energy executive the agricultural side of the business, than an agricultural executive the energy side,'' Teitelbaum said. ``ADM's bench strength is in agricultural materials and not the biofuels part of the business, even though ADM has been in the ethanol business for almost 30 years.''

Shares of ADM rose 15 cents, or 0.4 percent, to $36.340 at 4:15 p.m. in New York Stock Exchange composite trading. The stock is up 68 percent in the past year, partly on speculation the company will benefit from rising demand for ethanol as demand and prices for gasoline rise.

Rising Production

Ethanol is getting a boost from government moves in the U.S. to phase out the gasoline additive methyl tertiary butyl ether, or MTBE, after leaky storage tanks led to polluted groundwater in some locations.

ADM can produce about 1.1 billion gallons of ethanol, and the company said in September it plans to expand its capacity by 500 million gallons by early 2008.

Woertz is arriving ``at a critical time as ADM is boosting capital expenditures significantly to pursue energy-related projects where returns are likely to be volatile,'' Eric Katzman, a research analyst for Deutsche Bank Securities Inc. in New York, said in a note to clients today.

Drive Growth

``Creating ethanol is a refinery-type of business,'' said Jeb Armstrong, an analyst who follows the energy business for Argus Research Corp. in New York. ``That would make sense that they'd be looking at that as something that's going to drive their growth.''

The U.S. boosted ethanol production 21 percent to 4.264 billion gallons last year, surpassing Brazil, which makes the fuel from sugar, according to F.O. Licht, a commodity consulting company. U.S. ethanol output in February is up 23 percent from a year ago at 302,000 barrels a day on average, or 12.7 million gallons a day, the Department of Energy said this week.

There are 97 U.S. ethanol refineries with the capacity to produce nearly 4.5 billion gallons annually and an additional 35 refineries and nine expansions under construction with combined capacity of more than 2.2 billion gallons, according to the Renewable Fuels Association in Washington.

Rising production capacity in ethanol isn't a worry for ADM, because demand and prices are rising and the company has a history as a leader in the industry since it was developed in the past three decades, Woertz said.

``We do need support from all suppliers to meet the demand for energy,'' in the U.S., she said. ``We are the experts,'' and expansion in North America is a great opportunity for ADM and U.S. corn farmers, Woertz said.

Oil Experience

She said she would draw on her experience making and delivering fuels to customers to bring growth to ADM.

Woertz, a Pittsburgh native, worked for the accounting firm Ernst & Young after studying accounting at Pennsylvania State University, and in 1977 she joined Gulf Oil.

After Gulf was acquired by Chevron in 1984, Woertz arranged sales of oil fields and other assets to raise money to pay debt associated with the merger. She rose through the ranks as a finance manager, strategic planner and subsidiary president until being named executive vice president of downstream in October 2001.

As head of global refining, Woertz added 680,000 barrels of daily oil-processing capacity by expanding plants and acquiring stakes in refineries owned by others. She also steered more Chevron fuel production overseas to tap rising demand in Asia and Africa.

Woertz's had a reputation as being capable of handling problem businesses with low morale or trouble attracting people, Korn Ferry's Nielsen said.

``She made fundamental improvements in Chevron's downstream business,'' he said. ``Refineries were stretched, they were reactive. She looked at the asset base, at what they did well and stopped doing everything else. Today it's a low-cost provider with very high margins.''

To contact the reporters on this story: Stephen Voss in London at sev@bloomberg.net; Jeff Wilson in Chicago at Jwilson29@bloomberg.net

Last Updated: April 28, 2006 18:28 EDT