The Lishui Sag, situated at the East China Sea Shelf Basin, is regarded as one of the most prospecting oil exploration zones. Low exploration in this region requires detailed identification of source rocks to enhance further oil and gas exploration. Three potential source rocks, including the Paleocene Yueguifeng (E1y), Lingfeng (E1l) and Mingyuefeng (E1m) Formations, were investigated by integrating organic and inorganic geochemistry to estimate hydrocarbon generation potential, and to document original organic matter input and deposition environments. Two deposition models for source rocks were established considering tectonic subsidence and climate variation. The result shows that the E1y mudstones are dominated by high TOC content, oil/gas-prone kerogen at moderate maturity stage with relatively high hydrocarbon generation potential, whereas E1l and E1m mudstones are dominated by low TOC content, gas-prone kerogen at low to moderate maturity stage with low hydrocarbon generation potential, and coals with high hydrocarbon generation potential. The original organic matter input and deposition environment are obviously different among these three potential source rocks and are controlled by the coupling of tectonic subsidence and climate variation. Insufficient material supply lead mudstone deposition in a hemi-deep/deep lake during the E1y period, resulting in inefficient water mixing and stable water column stratification (high Gammacerane Indexs). The weak water inflow supplied minor oxygen and terrigenous organic matter to the lake due to arid-hot climate, as indicated by low Pr/Ph, C19 T/C23T, C20 T/C23T and C24Tet/C26T ratios, low Oleanane Indexs, and high C35 Homohopane Indexs and V/Ni ratios. Water algae, including pediastrums and chlorellas, which contributed to the development of high-quality source rocks, could be efficiently preserved in dysoxic condition. High subsidence rate together with sufficient sediment supply during the transgression in the E1l and E1m periods developed a coastal marine or paralic environment. The alternated climate brought unstable water inflow against stable water column stratification (low Gammacerane Indexs). Strong water inflow due to warm-humid climate provides abundant terrigenous organic matter and oxygen to the lake as indicated by high Pr/Ph, C19 T/C23T, C20 T/C23T and C24Tet/C26T ratios, high Oleanane Indexs, low C35 Homohopane Indexs and V/Ni ratios, and rich C29 steranes. Algal might be preferentially oxidized and degraded in aerobic conditions. Thus, mudstone is regarded as general-quality source rocks but coal is regarded as high-quality source rocks. Weak water inflow under arid-hot climate provided subtle aquatic and terrigenous organic matter to the lake, resulting in poor-quality source rocks.
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