Smaller annular size in casing drilling impacts both drilling fluid dynamics and wellbore geomechanics. Casing drilling has been the subject of several case studies reporting improvements in wellbore stability in wells traditionally prone to severe breakouts and stuck pipe issues. However, there are only very few publications reporting the theoretical, experimental or numerical results supporting the field observations. In this paper, we will discuss numerical simulations on the wellbore stability studies customized for casing drilling applications.Compressive failure has been typically prevented in intact shale formations by increasing mud weight since higher mud weight can reduce hoop stresses and raise the radial stress around the wellbore. However, the stress concentration and the formation strength around the wellbore can change with time leading to wellbore instability. Fluid invasion increases the near wellbore pressure which leads to less support to the wellbore. Fluid invasion may also reduce formation mechanical properties due to the physico-chemical interactions between formation and fluid. Casing drilling can help wellbore stability by reducing the shale-fluid interaction time and near wellbore permeability as well as improving near wellbore mechanical properties by plastering effect. We present a numerical study which shows the reduction of potential breakout occurrences using casing drilling compared to conventional drilling scenarios.