WRAPUP 2-Big US oil companies face growing concern on fracking

* Some 30 pct of Exxon shareholders back fracking proposal

* 41 pct of Chevron shareholders want fracking disclosure

* Breaking 40 pct shows shareholders "serious" - advocate
(Adds detail on protestors)

By Anna Driver and Braden Reddall

DALLAS/SAN RAMON, Calif., May 25 (Reuters) - Large blocks
of investors in the two biggest U.S. oil companies on Wednesday
demanded more disclosure about the environmental risks of
extracting oil and gas through hydraulic fracturing.

Exxon Mobil Corp (XOM.N) defended the practice at its
annual shareholder meeting on Wednesday, even as investors
peppered Chief Executive Rex Tillerson with concerns and
questions about it.

A proposal requiring more disclosure by Exxon on the impact
of "fracking" received about 30 percent of the votes by
shareholders in the world's largest publicly traded oil
company.

At rival Chevron Corp (CVX.N), which became heavily
involved in fracking through a recent acquisition, 41 percent
of shareholders backed a similar resolution.

"Breaking 40 percent on a first year resolution has only
happened a few times in the last few decades, so it shows how
seriously the company's shareholders are taking this issue,"
said Michael Passoff, who focuses on fracking at San
Francisco-based corporate responsibility group As You Sow.

(For a Breakingviews column on the votes [ID:nN25160848])

Hydraulic fracturing involves injecting a mix of water,
chemicals and sand into the earth to break up shale rock, in
order to release oil or natural gas. Environmentalists say it
can contaminate groundwater with dangerous chemicals.

The industry insists it is safe, and Tillerson said there
were claims about the 50-year-old technology that had no basis
in fact. The company regularly meets with local officials and
politicians, and is running an advertising campaign aimed at
addressing public concerns.

NOT RISK-FREE

While acknowledging the risks, Tillerson said Exxon works
to bring together regulators in states with shale drilling to
examine current rules and determine which are most effective.

"We're not trying to characterize this as an activity that
does not have risks," he told reporters after the meeting in
Dallas.

Regulators in states where shale drilling is growing at
breakneck speed are "stretched", but rules governing fracking
should not be set at the federal level, he said. Chevron echoed
a desire for regulation to stay at state level.[ID:nN25154102]

However, Passoff said even regulators acknowledge that the
current regulation by states is inadequate.

Exxon made a $35 billion bet on shale gas when it bought
XTO in 201O, and aims to double U.S. natural gas output in a
decade. As a result of this and other ambitious plans, oilfield
service providers such as Schlumberger Ltd (SLB.N) and
Halliburton Co (HAL.N) have seen huge growth in their fracking
operations.

Chevron became involved in the Marcellus shale region
centered on Pennsylvania through its $3 billion purchase of
Atlas Energy and then an acreage deal with Chief Oil & Gas.
[ID:nN04180588]

Chevron is growing production from Atlas aggressively, with
plans to expand output at least seven-fold. [ID:nN1196002]

But at Wednesday's meeting at Chevron headquarters in San
Ramon, California, speakers raised other environmental topics,
including an $18 billion judgment against the company in
Ecuador. Chevron is battling that ruling in a U.S. court, and
accuses the plaintiffs of extortion. [ID:nN25225194]

A few dozen protestors were outside the sprawling Chevron
campus, including some dressed as turtles who are concerned
about that creature's habitats near Chevron's Australian
natural gas operations, as well as another dressed as a pig.

Earlier, New York State Comptroller Thomas DiNapoli, who
runs a fund that owns 7.5 million Chevron shares, urged the
company to "face reality" and settle the 18-year-old Ecuador
case.

"Investors don't derive any benefit from this never-ending
courtroom drama," DiNapoli said in a statement.

Inside the meeting, Amazon Watch founder Atossa Soltani
reminded Chief Executive John Watson that, at an annual meeting
a decade ago, she had warned Chevron of the environmental
damage liability in Ecuador it would inherit by buying Texaco.

Watson responded by running a video setting out Chevron's
case, including an infamous clip in which Soltani, as she
listens to the plaintiffs' lawyers discuss tactics for
intimidating the Ecuadorean court, warns them: "I just want you
to know that it's illegal to conspire to break the law."
(Reporting by Anna Driver in Dallas and Braden Reddall in San
Ramon, California; editing by Alden Bentley and Dale Hudson)