ST. HELENA - Don Magorian, like the BART tunnelers who mentored him and the railroad and ore tunnelers who are now his competitors, dug gold mine tunnels in the Sierra Nevada for 20 years before he discovered wine caves in 1997.

The owner of Auburn-based Magorian Mine Services never returned to those mountains.

"This is the new gold," said his veteran tunneler Mike Holley.

Deep inside a hole in a Napa Valley hillside, Holley rides a noisy vehicle with caterpillar tracks and grinding tungsten carbide teeth. On a good day, he chews through three feet of volcanic earth, creating a 14,000-square-foot space that will eventually wow tourists, store wine barrels at ideal temperatures and house the underground tanks for the future Arkenstone Winery.

Burrow into what's increasingly all the rage in wine country: caves. Vintners are burying whole wineries inside caves, carving out dramatic grottoes for entertaining or creating more utilitarian storage spaces.

In both cases, the wineries are realizing savings by cutting their construction costs - sometimes by as much as half - and reducing bills for heating and cooling.

Chuck McMinn's cave, with burgundy floors and beige walls, feels more like an upscale hotel amenity than a hole in the ground. A double stack of wine barrels lines the walls leading visitors to a stunning tasting room with overhead chandelier and room for 50 people.

"As soon as we walked through those doors we were 30 feet underground," said McMinn, owner of St. Helena's Vineyard 29.

Showing off 1,000 feet of three-year-old tunnels directly beneath a sauvignon blanc vineyard, he added: "In this cave, we can store up to 1,000 barrels. That's 25,000 cases of wine, two years' worth of production."

Magorian well remembers McMinn's tasting room, where his crew cut out and carted away a rock the size of a Volkswagen Beetle.

Wine caves, first dug in the 1880s by Chinese laborers at Beringer and Schramsberg wineries in the northern Napa Valley, now number at least 150 in Napa and Sonoma counties, Magorian estimates. A new generation of caves emerged in the 1980s amid the extra wealth of increasing U.S. wine consumption. The trend slowed for a while, but numbers are again taking off with a strong economy.

The idea is spreading now to private homes.

"One of our clients says it's his eye of the hurricane," said David Provost, president of Napa-based Bacchus Caves, named for the Roman god of wine. "We've got people who put an art gallery in. One person down south is putting in a library because they're in a fire danger area and want their books to be safe. Another guy back East wants a place to store 58,000 bottles of wine," he said.

Provost is digging an 18,000-square-foot cave for Napa's Meritage Resort hotel with room for 245-person dinner parties.

Why a hotel cave?

"Because of the cost of construction," he said. "They're on a hillside, and what better use of a hillside than a cave? It's obviously very unique, and they're hoping for that to be a big draw."

Sacramento-area wine country has caves, too, at Gold Hill Winery at Coloma, Sogno Winery at Shingle Springs, Dobra Zemlja Winery in Plymouth and Winery by the Creek at Fair Play.

"It's a great party spot," said Charles Mitchell, owner of Winery by the Creek. "There's a certain amount of people who don't feel comfortable. They don't want to be underground. I love it," he said. "I have about 150 to 200 barrels in there."

Mitchell said the cost of his caves and tasting room "pushed up against $1 million."

In the Napa Valley, caves typically cost between $125 and $300 per square foot to excavate and finish - and more for upscale lighting and doors, Provost said. Winery architects say similar outdoor production and warehouse space is a minimum of $175 per square foot, while hospitality facilities that include tasting rooms start at $350 per square foot.

Tourists find caves irresistible.

"We send them to Schramsberg," said Judy Cook, owner of Calistoga's Brannon Cottage Inn. "I also send them to Storybook (Mountain Vineyards). Their caves are amazing. People are very interested because most people don't know what a cave is."

"If I'm on a tour and I can't take my guests to a winery with caves, I don't even mention it," said Don Rickard, president of Solano County-based Platypus Tours. "If I do know I'm going to a cave that day, I play it up. People are very excited about it.

"It's almost an otherworldly activity," he said. "You're in the earth. People are fascinated by being way down, surrounded by rock and dirt."

In St. Helena, Magorian is close to finishing a 5,500-square-foot cave for retired timber executive Dan Voeschen, owner of 7-acre Motion Vineyards.

Voeschen is putting an entire winery inside the hill because "this is all the space we've got."

At about $135 per square foot, the cave will cost nearly $800,000 and house a processing facility, barrel storage and private tasting. That's at least $162,000 cheaper than the minimum for an outdoor facility.

Amid his finished walls and dirt floor, Voeschen can already picture his winery there this fall.

"It will be a cute one," he says.