Most scholars believe that transgression events can contribute positively to organic matter enrichment and shale gas sweet spot development, while whether or not regression events are conducive to shale gas sweet spot development remains to be further discussed. Variations in organic carbon content (TOC), and major and trace elements at the Rhuddanian–Aeronian stage in the Luzhou area, the southern margin of Sichuan Basin, were analyzed in this paper. We discuss differences in paleoenvironment organic matter enrichment and shale sweet spot development during transgression and regression. A transgressive system tract (TST) occurred during the early Rhuddanian stage, while early highstand system tracts (Ehst-1 and Ehst-2) occurred during the late Rhuddanian stage and Aeronian stage, and a late highstand system tract (LHST) developed during the late Aeronian stage. A rise in sea level during the TST in the upper Yangtze resulted in an anoxic environment, where a continuous upwelling current brought about a large number of nutrients in the seawater, significantly increasing paleoproductivity. Strong tectonic subsidence, weak chemical weathering, and a rising sea level together led to a low terrigenous debris supply in the catchment area. Therefore, paleoproductivity and redox conditions were the primary controlling factors of organic matter enrichment at the TST stage, with a clastic supply of secondary importance. With the advance of the Guangxi orogeny, the organic matter enrichment at the EHST-1, EHST-2, and LHST stages was mainly controlled by redox conditions and debris supply. A comparison of the key physical parameters and geochemical indicators of shale reservoirs from these four system tracts suggests that two shale sweet spot types (type I and II) were developed during the Rhuddanian–Aeronian stage, occurring in the TST and EHST-2 stages. High TOC and high microcrystalline quartz content are key to developing type I sweet spots, while enhanced anoxic conditions in the bottom water caused by ephemeral, small-scale sea level rises are the main determinant of class II sweet spots in the later EHST stage.
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