UPDATE 1-US faces shale gas backlash without action-panel

* Federal panel released its recommendations in August

* Report called for more disclosure, water management

* Progress on recommendations less than hoped-Panel

By Ayesha Rascoe

WASHINGTON, Nov 10 (Reuters) - A federal energy panel on Thursday warned that rigorous action must be taken if government and industry hope to prevent major environmental damage and subdue the public backlash against the U.S. shale gas boom.

Charged with helping guide the future of U.S. shale gas development, the Energy Department subcommittee expressed disappointment that more had not been done on the 20 recommendations laid out in August in its initial report on the practice.

"The progress to date is less than the subcommittee hoped," the panel said in its draft final report, which focused on implementation of its recommendations.

(To access final report:)

In its preliminary report, the panel called for the creation of a national database of information about shale gas wells and for an overhaul of the management of the millions of gallons of water used in the process.

The panel said that even if its suggestions are not adopted, "some concerted and sustained action" will be needed to avert excessive harm to the environment. It cautioned that public opposition could limit development of the nation's massive shale gas reserves.

Advances in a drilling technique known as hydraulic fracturing, or fracking, have led to rapid expansion of U.S. shale gas production.

But as shale gas development has spread, green groups and landowners near the gas wells have raised concerns about possible water contamination and air pollution.

The Obama administration formed the shale gas subcommittee to address these complaints.

Industry groups have been working to increase transparency and ease fears about shale gas development. Leading U.S. shale gas producers such as Exxon Mobil , Chesapeake , Chevron and Devon Energy , hope to stave off measures they fear would make development too costly.

The American Petroleum Institute, an oil and gas trade group, said it has been working with state regulators to share knowledge and "encourage them to help us raise the bar on performance."

Deb Nardone, director of Sierra Club's Natural Gas Reform Campaign, said the panel's report highlights the inadequacies of industry efforts.

"The Sierra Club urges the Obama administration to take these recommendations seriously, and push for their swift adoption," Nardone said in a statement. "Without them, the natural gas industry will continue to recklessly drill and further endanger our air, water and communities."