WASHINGTON (Reuters) - President Barack Obama will nominate Sally Jewell, an outdoor enthusiast and chief executive of retailer REI, as U.S. interior secretary, an administration official said on Wednesday.

Jewell is the first woman Obama has announced for his second-term Cabinet, which has been criticized as lacking diversity, and also lends credentials from the nation's West.

She would replace Ken Salazar, who said he did not intend to stay for Obama's second term.

Obama is expected to announce the nomination on Wednesday. The Washington Post first reported the nomination.

Among other things, the next interior secretary will lead the department's implementation of controversial rules governing the use of hydraulic fracturing, or fracking, on public lands, oversee the push to drill in the Arctic, and guide the policies governing permits of renewable energy on federal land.

Jewell, a former banking executive, joined Recreational Equipment Inc as a board member in 1996 before taking over as chief operating officer in 2000 and then later as CEO of the national retail chain.

A graduate of the University of Washington, where she now serves as a regent, Jewell began her career as an engineer at Mobil Oil Corp, working in Oklahoma and Colorado.

Washington state-based REI is known for its conservation and stewardship efforts as well as its co-op structure that includes more than 10 million consumer "members." It has also been voted as one of Fortune magazine's best companies to work for.

An outdoorswoman who lists mountaineering and kayaking among her hobbies, Jewell served on the "National Parks Second Century Commission," whose goal was to help shape the future of the National Parks System.

She has received several awards recognizing her work in environmental conservation.

Obama is remaking his energy and environmental team at a time when the nation is responding to a surge in shale oil and gas development that has transformed the U.S. energy outlook.

Decisions are still awaited on replacements for Lisa Jackson, the Environmental Protection Agency administrator, and Steven Chu, the U.S. Energy Secretary.

(Reporting by Susan Heavey and Ros Krasny; Editing by Doina Chiacu)