The oil shale of Dongying sag shows excellent exploratory potentiality. However，recent research on the shale is little，and the sequence boundary is difficult to be identified based on seismic and logging data，which restricts sequence framework to be built. The sequence boundary of shale was identified by making full use of the traditional division method of progradation and retrogradation sequence according to the change of palaeobathymetry. By associating element sequence with GR sequence，a method was developed for shale sequence division to establish sequence framework of shale in Dongying sag. Combined with the palaeoenvironment analysis，lithofacies and abundance of organic matter，it is determined that the laminated facies with abundant organic matter respectively deposited between the parasequence boundaries of GRPS3 and GRPS4，GRPS6 and GRPS7 are favorable segments with good lateral continuity. And a reasonable drilling design was also put forward to improve the economic benefits of further exploration and development of oil shale.