The analysis software, FLAC3D, was used for simulation of Nong'an oil shale mining according to the three-dimensional fast Lagrangian algorithm. A simulation study involving drilling hydraulic mining methods for different borehole spacings in the Nong'an oil shale mining area was conducted. The best mining scheme was selected in terms of safety factors and economic benefits, and used for the analysis of the vertical displacement and ground surface settlement of the oil shale area. Drill hole spacing was identified as a key factor for the coefficient of borehole hydraulic mining based on the general relationship between the coefficient and borehole spacing. The optimal mining hole spacing was 25 m, and the distribution regularities of the vertical displacement of the surrounding rock near the excavation and earth surface were observed. The results showed that FLAC3D can simulate and analyze the oil shale hydraulic mining process and is an effective and suitable method for oil shale exploitation research.