Abstract The preferential generation of vertical natural hydraulic fractures at the contact of the Upper Devonian Hanover gray shale and overlying Dunkirk black shale of the Catskill Delta Complex, western New York State, suggests that the latter served as a hydraulic top seal to formation fluids migrating upward from deeper in the sediment pile. Petrophysical properties and small-scale textural characteristics of these siliceous fine-grained rocks confirm the crucial role of depositional environment and sequence stratigraphic position of a shale lithotype in determining its sealing capacity. The especially high sealing capacity of the basal interval of the Dunkirk shale, inferred early high-stand systems tract (HST) strata, reflects the anoxic depositional environment of these deposits that favored the preservation of their abundant organic matter and finely laminated depositional texture. The absence of bioturbation enabled the undisrupted sediment, notably carbonaceous clay-rich laminae, to undergo rapid mechanical compaction, platy grain reorientation, and porosity reduction. Compaction-induced squeezing of ductile organic matter into void spaces further reduced pore throat diameters. Immediately underlying heavily bioturbated deposits of the organic-lean Hanover shale, inferred upper HST or low-stand wedge sediments, accumulated in a dysoxic depositional environment. Disruption of layering and homogenization of sediment by burrowing organisms produced a more porous and permeable microfabric through which formation fluids moved only to be arrested by the high capillary entry pressures at the base of the Dunkirk shale. Natural hydraulic fractures, some of which propagated into the Dunkirk shale, formed when fluid pressure at the top of the Hanover shale reached the fracture gradient. The high sealing capacity of the basal Dunkirk shale was probably enhanced by its finely laminated nature and the generation of biogenic methane, both of which contributed to the formation of a near-impermeable gas capillary seal.