Shale Gas And Hydraulic Fracturing: What Is It And What's The Risk?

The short answer as to the question of well fracturing and risk to surface or domestic waters is that there's not much risk, if any at all. 
 

Usually these targeted shale beds are from 4,000 to 13,000 feet (1200 m to 4000 m) below the surface.  A well is drilled through the zone, the casing is set and sealed with concrete and perforated into the target shale zone.  If enough surface water pressure is applied, the rock near the perforations will crack open and the crack will propagate as more water is pumped.   The water is treated with mostly inert chemicals mainly to suspend proppant (sand or silica) so that it flows into the cracks.  Once the pumping stops, the fractures will attempt to close but the proppant holds open the crack. The proppant material is coarse enough to allow gas or oil to subsequently flow through the crack and into the well.   Even though hydraulic fracturing has been done for more than 40 years, a newer development is that wells have extended horizontal sections in the gas- or oil-bearing shale.  This allows for more perforations and more production per well.   

 There are a number of safeguards to protect surface or domestic water wells: 

1. The well is designed with concentric casing strings, each sealed with cement, to isolate the producing zone from any zone above.  
2. Fresh water sandstones, for domestic or utility water usually extend to 2000 feet depth (-2000 ft), but domestic and city water wells are usually much shallower at -200 to -1000 feet, so there's a big separation distance between hydrocarbon zones and fresh water zones. 
3.  The fracturing (fracking) is done with very large quantities of fresh water that is mixed with gelling agents like guar gum or hydroxyethyl cellulose to make the water "thick"so that the proppant material (sand or silica) stays suspended in the water and flows into the newly created cracks or fractures. There are other additives but none toxic considering the quantities used.  Have a look at a report from the New York State's department of environmental conservation  NYS Marcellus Well Hydraulic Fracturing Considerations.

The main problem for oil and gas companies is how to dispose of the water that is pumped into the well (finding sufficient water can be a challenge as well).  For the well to flow hydrocarbons, nearly ALL of the water originally pumped into the well must be produced back, usually back into large tanks or plastic lined basins.  Frac water is now mostly recycled now since it is a large volume (say 1 million gallons per well).  Ultimately spent fracturing water must be disposed of in a licensed (commercial) disposal well or other suitably designed sewer water treatment facilities.   

This new disposal problem is causing some publicity of this major new hydrocarbon resource. The shear number of wells being drilled is also in the headlines. But the huge increases in oil and gas (mostly gas) reserves is a major boon to the energy security of the country and could potentially help our nation's chronic balance of payments problem.  More on this later!

I hope this is helpful.  Remember, sometimes strange and unexpected things happen, and if it does, now you know that it won't be common or dangerous.  A well-informed public will not want to lurch toward some inappropriate policy due to a lack of knowledge of the subject.