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Excerpts from http://en.wikipedia.org/wiki/Fracking:

Hydraulic fracturing (called "frac jobs"[1] or "frac'ing" in the industry or recently "fracking" by some news media reports [2]) is a process that results in the creation of fractures in rocks, the goal of which is to increase the output of a well. The most important industrial use is in stimulating oil and gas wells, where hydraulic fracturing has been used for over 60 years in more than one million wells. On the other hand, high-volume horizontal slickwater fracturing, although used for 20 years, has in the past few years seen rapid growth in its use. The fracturing is done from a wellbore drilled into reservoir rock formations to enhance oil and natural gas recovery.

The technique of hydraulic fracturing is used to increase or restore the rate at which fluids, such as oilgas or water, can be produced from a reservoir, including unconventional reservoirs such as shale rock or coal beds. Environmental concerns regarding hydraulic fracturing techniques include potential for contamination of aquifers with fracturing chemicals or waste fluids.

(The article is quite extensive. Please read as much of it as possible.)