HOUSTON—For commodity producers in North America, it’s all about balance. Oil markets will rebalance in the near term, but natural gas imbalances will be much longer-term, said Mark G. Papa, a senior adviser and partner at private-equity firm Riverstone Holdings, which he joined upon retiring from EOG Resources Inc. (NYSE: EOG) in 2015, where he was chairman and CEO.

The Houston-based executive, who was ranked one of the top 100 U.S. CEOs by Harvard Business School while he was chairman of EOG, told the Houston Producers Forum that North American gas “is not a pretty picture for producers.

However, oil paints a different picture, he said. As global oil production declines in the face of a drilling slowdown and deepwater project deferrals, oil markets should rebalance in 2018.

“It’s the pig that’s not in the python—down the road we are going to be looking for the oil that is not being drilled for today,” he said. “At the bottom line, world oil demand is going up by 1 million barrels per day [MMbbl/d] per year, per year, per year. Yet at $45, it’s uneconomic to develop new oil anywhere in the world except for the Middle East.”

As a result, Papa said he thinks oil prices will rise in six to 18 months and reach “a stable equilibrium price in the range of $60 to $75 per barrel, what I call a ‘Goldilocks’ price.” He said $90/bbl to $100/bbl is unlikely—while a long-term price below $45/bbl is equally unlikely.

Meanwhile, “this is the biggest industry restructuring since 1986,” said Papa, who began his career in 1981.”If you go through all the first-quarter earnings calls, every single public company has announced they’re selling properties, and I’ve never seen a time when every company is selling. And, who is the buyer going to be if it’s not private equity?”

It could be Papa, for in February he and Riverstone IPOed his special purpose acquisition company, or SPAC, called Silver Run Acquisition Corp., raising $450 million to buy oil and gas assets.

He did not talk about the new company’s targets, however, but he did say that he is quite pessimistic about natural gas. “The amount of shale gas that has been found relative to demand is enormous and it has created a big imbalance, in my opinion,” he said. “The Marcellus, Utica and Haynesville are low-cost shales that will conspire to keep gas prices lower than people expect, and for a long time.”

Papa said that by 2018, the Marcellus and Utica will likely be producing up to 23 billion cubic feet per day (Bcf/d), or 33% of the U.S. total.

“That’s about as dramatic a change as you can think of, and in an amazingly short time,” he said, adding that the Haynesville is a “supply sleeper” that will come on strong when better gas prices make it economic again.

“You start getting 20 million cubic feet per day out of there and similar finding and development costs to the Marcellus and Utica, and you’ll have three large supply pools with roughly the same F&D costs. At a gas price of $2.50 or if you’re lucky, $3, your IRR on individual wells is going to be quite attractive. This is going to back up all the gas in the Rockies and in Canada.”

Papa said he thinks sub-$2 will fade in the rearview mirror and a more reasonable band of $2.50 to $3 will be seen in 2017.

“Longer-term is where you can get kind of depressed,” he said. “The U.S. has a sufficient gas supply for 50 years. And I think that LNG exports in the time frame of 2018 to 2020, of about 6 billion cubic feet per day (Bcf/d) out of a total production of 80 Bcf/d by that time, are not going to be enough to fix the problem.”

Papa said we’ll be in a similar oversupply situation for NGL as well.

“Now on oil, we have a totally different macro picture,” he said. “Everyone is pretty much reaching consensus,” that the world market will be tighter next year, based on lower production and rising demand. Full-year U.S. output is estimated to fall by 600,000 barrels per day this year, and other non-OPEC production by 350,000, while global demand is estimated to rise by 1 or 1.2 MMbbl/d.

“If you started the year 2016 with an oversupply of 1.5 MMbbl/d, you’ll be back in balance [except for storage]. It’s almost certain the U.S. will decline again in 2017; the only question is by how much. However, if prices hit $60 or more, the rebound will occur in 2018.”

Papa said that too much focus has been placed on China’s negative economic headlines, which obscure the fact that Chinese oil demand actually grew 619 Mbbl/d last year “despite what you keep hearing. Their demand is still very stout.”

Leslie Haines can be reached at lhaines@hartenergy.com.