The incident, which occurred about 3.50pm, was caused by an independent contractor working on a grass berm near the intersection of Hawthorne Dr and Tex Smith Lane.
Queenstown Volunteer Fire Brigade Chief Fire Officer Terry O'Connell said firefighters from the Frankton and Queenstown stations sprayed water on the pipe to disperse the gas and ''keep it away from ignition points''.
Staff from gas installation company GasCo shut off the gas main feeding the area, while police evacuated businesses surrounding the site and closed nearby roads, causing traffic to back up around the busy Remarkables Park shopping area.
Firefighters remained at the scene for about 45 minutes as the remaining gas dispersed, Mr O'Connell said.
Over The Top helicopter company pilot Brad Collier said he and seven other staff inside their company's building next to the site ''smelt a lot of gas in the air''.
''Then the police came in and told us to leave.''
Queenstown Airport communications manager Jen Andrews said the incident caused no disruption to flights or other airport operations.
