* Chemical disclosure to help public confidence-official
* Interior hopes to finalize rules 12 months after issuing
* 14 pct of U.S. natgas output was on federal land in 2010 (Adds details, background)
By Ayesha Rascoe
WASHINGTON, Oct 31 (Reuters) - The U.S. Interior Department plans to issue a proposal soon forcing companies to reveal the chemicals they use in the so-called fracking drilling process on federal lands, as the Obama administration responds to public safety concerns over the shale exploration boom.
David Hayes, deputy secretary at the Interior Department, told a federal shale gas advisory panel on Monday that the department hopes to issue disclosure rules for hydraulic fracturing on federal lands in "a couple of months." It plans to finalize the guidelines about 12 months after that.
Hydraulic fracturing involves injecting a mix of water, sand, and chemicals into shale formations at high pressures to extract oil and gas.
"The high level of concern about the nature of fracking chemicals suggests the complete disclosure of all chemical components and composition of fracking fluids would improve public confidence," Hayes told the Energy Department's shale gas panel.
Calling the current hydraulic fracturing rules that were developed in 1982 "outdated," Hayes said the department is also working to develop rules focused on ensuring well integrity and managing waste water.
Hayes' comments come nearly a year after the department first announced it was considering disclosure regulations for the drilling practice.
Advances in the technique have led to a drilling boom that has prompted a public backlash over concerns about possible water contamination and air pollution.
Hayes stressed that the department is aware of industry efforts to increase transparency for shale drilling and does not want its rules to be burdensome or to duplicate other efforts.
About 14 percent of all U.S. natural gas production occurred on federal land during the last fiscal year. The department estimates that hydraulic fracturing is used for about 90 percent of gas wells drilled on public lands.
The Obama administration has walked a fine line on the issue of hydraulic fracturing, lauding the energy security benefits of shale gas, while also stressing the importance of addressing environmental concerns about the practice.
Last week, in another sign that the administration was inching forward with regulations for hydraulic fracking, the Environmental Protection Agency announced that it would be developing rules for disposing of wastewater from shale gas wells.
Proponents of shale oil and gas development have said that over-regulation of the shale drilling will limit production of a massive domestic fuel resource.
In the wake of the controversy surrounding fracking, the shale gas advisory committee was created by the Obama administration to offer recommendations on the best path forward for shale output.
In its preliminary report released in August, the panel called for the creation of national database of information about shale gas wells, and for overhaul of the management of the millions of gallons of water used in the process. The panel's final report is due out in November. (Reporting by Ayesha Rascoe; editing by Jim Marshall and Andrea Evans)