James Cameron is building momentum on writing the scripts for Avatar 2 and Avatar 3, and while he hasn't quite cracked the story yet, he knows that some of the second film will take place underwater.  While it's possible to shoot dry-for-wet, it's not entirely convincing, and as we all know, Cameron loves a technological challenge.  Speaking to the NAB Technology Summit on Cinema [via Empire], Avatar producer Jon Landau revealed that "We have kept a team of digital artists on from Avatar in order to test how we can create performance capture underwater.  We could simulate water [in CG], but we can't simulate the actor's experience, so we are going to capture performance in a tank."

Landau didn't provide any further details on the development of that process, but did add that Avatar 2 and 3, which will shoot back-to-back, will wrap up the story of Jake (Sam Worthington) and Neytiri (Zoe Saldana).  This falls in line with Cameron's comments from last September where he said he wanted a fourth Avatar movie, but it would be a prequel.