Picton's port - Port Marlborough - is being evacuated while a 25,000 litre LPG tank is leaking fuel at the Kiwi Rail yard.
Police closed the port, including both ferry terminals after the incident just after 6am today.
The Bluebridge terminal has reopened. But the Interislander terminal remains closed.
Kiwirail confirmed to 1 NEWS it has slowed the arrival of Interislander sailings until they have been cleared to do so, including services that were scheduled to arrive in Picton at 7am today.
The port and the wider industrial area will be evacuated and there are road closures in place on Dublin Street and Auckland Street.
Two Fire and Emergency New Zealand (FENZ) crews from icton were in attendance and two crews from Blenheim and a haz-mat unit from Nelson will also attend the scene.
FENZ have now left the scene.
Firefighters wore breathing apparatus and sprayed the tank with water to minimise the risk of any explosions.
Technicians are on site to assess the leak.
The LPG tank valve has been isolated after a partial breach said a Fire and Emergency spokesperson (FENZ).
"We apologise to passengers affected by an incident at the Picton terminal. We are working as quickly as possible to reopen the terminal, which is expected later this morning," said a Interislander spokesperson.