The lower Tertiary E h3 is divided into two sections: the upper members of E h3 and the lower members of E h3 in the Biyang Depression. The first section is generally regarded as a key target of oil and gas exploration, but the resource potential of the lower members of E h3 has been neglected. We have obtained new knowledge about E h3 from comprehensive geological research. The lower members of E h3 are high-quality and main source rocks, which have good oil and gas resource potential. This is a new direction for oil and gas exploration. The geochemistry characteristics of source rocks of the lower members of E h3 in the lower Tertiary of the Biyang Depression were analyzed in detail. A basin modeling method was applied to hydrocarbon generation of the lower and upper members of E h3 source rocks, the oil and gas resource potential was comparatively analyzed, and then favorable tectonic zones were pointed out. In the lower members of E h3 , a set of semi-deep lake to deep lake high-quality source rocks occurs rich in algae organisms, mainly of type II 1 , with a high abundance of organic matter. Most of the source rocks are just in the peak stage of hydrocarbon generation, which is a favorable foundation for forming abundant oil and gas resources in the Biyang Depression. The comparative analysis of the hydrocarbon-generation quantities between lower and upper members of the E h3 source rocks shows that the lower members of E h3 have good oil and gas resource potential, and the hydrocarbon-generation quantity accounts for 51% of the total in E h3 . Specifically, the oil-generating quantity accounts for 50% of the total and the gas-generating quantity accounts for two thirds of the total. Therefore, source rocks in the lower members of E h3 of the Biyang Depression have good oil and gas resource potential, which is a key factor for future deep oil and gas exploration. The lower Tertiary E h3 is divided into two sections: the upper members of E h3 and the lower members of E h3 in the Biyang Depression. The first section is generally regarded as a key target of oil and gas exploration, but the resource potential of the lower members of E h3 has been neglected. We have obtained new knowledge about E h3 from comprehensive geological research. The lower members of E h3 are high-quality and main source rocks, which have good oil and gas resource potential. This is a new direction for oil and gas exploration. The geochemistry characteristics of source rocks of the lower members of E h3 in the lower Tertiary of the Biyang Depression were analyzed in detail. A basin modeling method was applied to hydrocarbon generation of the lower and upper members of E h3 source rocks, the oil and gas resource potential was comparatively analyzed, and then favorable tectonic zones were pointed out. In the lower members of E h3, a set of semi-deep lake to deep lake high-qu ality source rocks occurs rich in algae organisms, mainly of type II 1, with a high abundance of organic matter. Most of the source rocks are just in the peak stage of hydrocarbon generation, which is a favorable foundation for forming abundant oil and gas resources in the Biyang Depression. The comparative analysis of the hydrocarbon-generation quantities between lower and upper members of the E h3 source rocks shows that the lower members of E h3 have good oil and gas resource potential, and the hydrocarbon-generation quantity accounts for 51 % of the total in E h3. Specifically, the oil-generating quantity accounts for 50% of the total and the gas-generating quantity accounts for two thirds of the total. Thus, source rocks in the lower members of E h3 of the Biyang Depression have good oil and gas resource potential, which is a key factor for future deep oil and gas exploration.