Upper Permian organic-rich lacustrine mudstones ("oil shales") that crop out in the southern Junggar basin rank among the richest and thickest petroleum source rock intervals in the world, with maximum TOC values reaching 34% and Rock-Eval pyrolytic yields (S[2]) up to 200 kg HC/t rock. Lacustrine sedimentary facies define an overall transgressive-regressive cycle of approximately 2000 m gross thickness, which includes approximately 800 m of source rocks averaging 4.1% TOC and 26.2 kg HC/t rock. Basinal facies comprise silicic, organic-rich, laminated lacustrine mudstones and interbedded siltstones; organic matter contained in the mudstones ranges in composition from type I to type III. Basinal facies were deposited in a deep, oxygen-deficient, stratified lake. Lake-margi facies consist of nonlaminated siliciclastic mudstones, rippled dolomitic siltstones and sandstones, and minor limestones. Maximum TOC values are approximately 6%. Desiccation cracks are common in the marginal facies, but evaporite minerals are rare or absent.

Biomarker correlation parameters measured from rock extracts exhibit significant stratigraphic variability, but strongly support the hypothesis that Upper Permian lacustrine oil shales charge the giant Karamay field in the northwestern Junggar basin. Karamay oils are characterized by high relative abundances of beta-carotane. This characteristic is restricted to desiccated facies in the outcrop sections, however. We therefore propose that an abundance of beta-carotane indicates elevated environmental salinities during deposition of the oil shales. Orographic precipitation induced by a paleo-Tian Shan range may have provided fresh water to the southern areas of the basin, while more evaporative conditions prevailed to the north.

Outcrop oil seeps confirm that the outcrop sections have attained sufficient thermal maturity to generate oil. T[max] values range from 431 to 451 degrees C, vitrinite reflectances range from 0.73 to 0.88%, and sterane isomerization ratios range from 0.30 to 0.48 (20S/20S+20R). matoil(registered trademark) computer modeling of burial history and thermal maturity of the outcrop sections indicates that approximately 4-5 km of Triassic-Jurassic cover was needed to bring the oil shales to their current maturity. The major phase of hydrocarbon generation in this area appears to have preceded the creation of traps by Neogene thrusting, which may account for the lack of discoveries in the southern Junggar basin. Most of the oil discovered so far is trapped in structures which originated duri g the late Paleozoic or Mesozoic.