(Adds option of Canadian crude by rail, background on Bayway)
LINDEN, N.J. May 23 (Reuters) - Phillips 66 said on Thursday it would use more domestic shale oil at its New Jersey Bayway refinery and could consider exporting gasoline from the facility thanks to lower costs and as U.S. fuel demand wanes.
The 238,000 barrel-per-day (bpd) Bayway refinery is one of several on the East Coast emerging from years of poor margins as they have depended on higher-priced oil from Europe and Africa due to a lack of access to cheaper domestic crude.
The shale oil revolution from the Bakken formation in North Dakota is changing that as East Coast refineries work out the logistics of bringing in that crude by rail. That would further reduce costs at refineries, which currently benefit from low power costs.
Bayway already receives Bakken crude, transported by rail to Albany in New York State and then by barge to the refinery, which is located by a narrow body of water between Staten Island and New Jersey.
"There's 80,000 to 90,000 barrels coming by rail from North Dakota versus zero a year ago. It processes well," Bayway refinery manager David Erfert told journalists on refinery tour on Thursday. He later said Bayway at times received 70,000 bpd.
Philips 66 is in the process of building an offloading facility that will allow it to receive additional Bakken crude directly to the refinery.
The facility is built to accommodate a unit train of 100 rail cars per day. With each rail car able to hold 750 barrels, the capacity would be 75,000 bpd, Erfert said, adding that Bayway could also take Canadian crude by rail too.
"We're considering it. With a rail rack on site, that opens a lot of optionality," he said.
Phillips said the offloading facility's capacity does not translate into actual 'crude by rail' volumes and declined to give the overall expected volume.
In January, the company said it had entered a five-year commitment to ship Bakken crude by rail to Bayway using Global Partner LP's loading facilities and terminals.
And in March, it said it had agreed to ship up to 40,000 bpd from pipeline operator Enbridge Energy Partners' train terminal in North Dakota, although this crude would go to both its West Coast and East Coast refineries.
The boom in domestic shale oil production, from Bakken and from the Eagleford formation in Texas, coupled with steadily falling gasoline demand, helped turn the United States into a net exporter of refined products in 2011 for the first time in over 60 years.
The East Coast however is still a net importer due to the sheer size of the market in the country's most populated region. But falling demand, cheaper refining costs and struggling European refineries could change that, Erfert said.
"We're looking, in several years' time, into installing facilities to do that (export)," Erfert said. "We can already export diesel and we do occasionally. Additional piping would be needed to export gasoline." (Reporting by Sabina Zawadzki; Editing by Chris Reese and Bob Burgdorfer)