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Increasing the optical range of target detection and recognition continues to be an area of great interest in the ocean environment. Light attenuation limits radiative and information transfer for image formation in water. In this paper, the authors briefly review current methods of imaging and then describe a variation of the spatial interferometric technique that relies upon projected spatial gratings with subsequent detection against a coherent return signal for the purpose of noise reduction and image enhancement. A model is developed that simulates the projected structured illumination through turbid water to a target and its return to a detector. The model shows an unstructured backscatter superimposed upon a structured return signal. The model has been extended to predict what a camera would actually see, so that various noise-reduction schemes can be modeled. Finally, some water-tank tests are presented, validating original hypothesis and model predictions. The method is advantageous in not requiring temporal synchronization between reference and signal beams and may use a continuous illumination source. Spatial coherency of the beam allows for the detection of the direct return, while scattered light appears as a noncoherent noise term.