Market Topics

Is That Really My Oil?


ADDISON, Texas – In a faceless office park in this quiet Dallas suburb, a secretive company is working hard to protect bank notes, agrochemicals, pharmaceuticals, spirits, fuels – and lubricants – from counterfeiting, theft, adulteration, commingling and other abuses.

Petroleum fuels our industries, drives our economies, and its a magnet for theft, says Authentix, the 7-year-old company that provides product and packaging authentication and tracking.

Were a relatively small company, with 120 employees, and authentication is all we do, Lal Pearce, president, global business development, told LubesnGreases during a visit late last year.

Other companies sell markers or readers, but the Authentix approach is different, said Pearce. We sell a comprehensive solution, with a service and partnering element; its not a product sale. We ask, What are we going to do when you find the cheaters?, which is a key part of the enforcement phase.

Authentix was formed in November 2003 from the merger of Isotag and Biocode, two of the authentication industrys leaders. Biocode, based in York, U.K., was originally formed in 1989 and became independent of parent company Royal Dutch Shell in 1992. Isotag was started in 1996 with technology licensed from Los Alamos National Labs in the United States. In early 2008 an investment group led by the Carlyle Group and J.H. Whitney Co. purchased Authentix. The Carlyle Group is now the majority shareholder, J.H. Whitney is minority shareholder, and the management team owns equity, too, Pearce said.

The companys oil and gas division serves both companies and national governments faced with the loss of retail sales and tax revenues. Countries that subsidize fuel prices use our services, Pearce said. For example, in India we can detect 1 percent of kerosene in road fuel. In that case, we marked the adulterant, the kerosene, rather than the fuel.

For corporate clients, brand protection is a major goal. If you protect a brand, the bad guys will move on, Pearce quipped.

The challenges of protecting brands and governments can differ, noted Kyle Beedy, oil and gas vice president. Getting money is important to brand owners, but protecting the brand comes first. Governments are hurting so badly for money, the money comes first. But with governments, the relationships are complex. In some cases, government officials might be benefiting from corruption.

A comprehensive solution is complicated, Pearce continued. The goals are brand protection, recovering or protecting revenues and limiting liabilities.

Dont disrupt my process is what our clients always say. So with fuels, for example, we put our markers in the detergent additive. Some marker even goes into [fuel] trucks by hand, for example in some African countries. We also provide proprietary hand-held devices to test the products, and our custom software lets the customer monitor it all.

For branded products, Authentix provides three levels of protection: in the product, in the packaging, and with track-and-trace software through the supply chain.

In-product chemical markers are inserted at parts per billion levels. They cannot be detected by conventional chemical analysis, Authentix claims, only by its proprietary readers and test kits. Packaging markers include combinations of overt, covert and forensic technologies. These can be incorporated into packaging substrates, labels, visible inks, invisible inks and varnishes, laminates, closures, and more.

Tracing a product through the supply chain is a bit more complicated. For lubricants, bulk distribution is parallel to fuels, Pearce said. The key is often finding the leak in the supply chain.

To accomplish this, each packaged product receives a unique license plate – serialized codes that are applied during packaging operations, read inline automatically and uploaded to a central server. Individual covert unit codes are linked to overt codes and to case and pallet codes. In the warehouse, pallet codes are matched and customer destination details are recorded at the point of dispatch. At the distributor, product cases are scanned on receipt and matched to retail customer data if the products are going to a retail outlet. Throughout the process, Authentix software tracks the product and, together with field inspection data, can support legal action where required. By relating individual unit codes to customer shipments, diverted products can be traced.

Labs and Demos

Jim Seely, director of oil and gas platforms, led a tour of the Authentix labs, where the companys analytical chemists develop its markers and test samples. Oil and gas markers are all organic, said Seely. We develop the custom chemistries and farm out the scale-up. Its all proprietary.

In the forensics lab, scientists provide quality control for both organic and inorganic materials. Were primarily using spectrometers – the markers emit ranges of light, Seely noted. Plus we use particle-size analyzers. Were a nanotech company.

There is no catalogue of Authentix chemistries, Seely said as he whisked past the production labs where proprietary inks were being manufactured. Its all custom and proprietary. Most of our large-scale organic manufacturing is farmed out, but some inorganic work is done in-house, such as manufacturing ceramics.

A nod toward locked doors identified the workspaces and labs where Authentix develops security features and detection instrumentation for banknotes. The companys shipping area is also restricted-access, for security.

Handheld Detectors

Seely was much more forthcoming as he demonstrated hand-held devices used to detect the companys markers in liquids. These devices test for the part-per-billion markers that go into the product, and provide court-defensible data, he said. The company sets up procedures with each customer for resampling in the case of questionable or failing data, because legal action is often the result.

Holding the companys LSX 1000 liquid spectrometer, Seely dropped a tiny vial of lubricant into a slot and hit the test button. Thats all there is to it. Its very light and portable, he explained.

For more accuracy, the LSX 2000 takes a bench-top spectrometer and minimizes it, puts it into a portable box with a touch screen, he continued. It gives very accurate results regardless of ambient temperature or humidity.

What if the wrong person obtains one of the devices? The program deletes its memory if you try to take the box apart, said Seely.

For lubricant packaging, Seely went on, Authentix offers multi-level protections. Step one is to identify where the package came from. You can use a simple two-dimensional bar code thats only visible under fluorescent light. But UV is not high security. A criminal can remove the bar code with acetone.

Higher levels of protection on a bottle might include a covert code on the front label which identifies the distributor, but requires special illumination to detect. For lubricants, Seely suggested fluorescent markers for field detection and forensic markers for laboratory detection.

Shrink-wrapped bottles with holograms give customers a false sense of assurance, he continued, as holograms can be counterfeited. Seely demonstrated the HVX, a small detector that fits in the palm of the hand and reads covert markers in the ink. This very small detector can validate the presence of a proprietary marker. Authentix developed and makes the light-stable ink.

All the detectors, he explained, are programmed to read specific wave-lengths of light from the markers in the ink. Another device can read seal markers through a plastic cap, and the marker can go into the plastic itself.

Case Studies

Authentix will not identify its clients, but it delights in offering case studies that are relevant to the lubricants industry.

In one case, sales of a major brand of a top multinational spirits company in an Asian market were being significantly eroded by counterfeits. Genuine bottles were being refilled with low-quality local product.

An imperceptible food-grade marker was incorporated in the liquid at parts-per-billion levels prior to bottling in Europe. This allowed counterfeit products to be identified in retail outlets by nontechnical personnel, providing proof for law-enforcement agencies to impound the stock immediately. Following confirmation by chemical analysis the impounded stock was destroyed. The total program cost $500,000 and the brand owner increased net brand contribution by $6 million. The brand owner has extended the program to other markets.

In another case, Authentix marked the gasolines sold by a top U.S. branded retailer, and found that approximately one in five randomly sampled stations was selling gasoline with marker levels lower than the brand owners enforcement level. Over 2,500 samples were tested, Authentix said, with 461 failures.

Authentix provides actionable information to solve counterfeit, adulteration and smuggling issues, concluded Lal Pearce, and we want to apply our technology to lubricants.