The blast caused a major blaze that led to the evacuation of six homes, the closure of a main road and gas supplies being cut off.
Both companies neglected basic safety measures when a new section of gas mains needed to be installed during a construction project on Leeds Ring Road at Beeston.
Leeds Crown Court heard that numerous safety failings by both companies resulted in welding work on a gas main sparking a fire that sent flames 20ft into the sky. Three workers had to flee to escape. Six homes had to be evacuated and fire crews used water jets to protect nearby properties.
It took fire-fighters more than 10 hours to get control and the ring road was closed for two days.
The incident, on 3 September 2010, was investigated by the Health & Safety Executive (HSE), which prosecuted Leeds-based Northern Gas Networks Operations Ltd (NGNO), known as United Utilities at the time, and Morgan Sindall (Infrastructure) plc (MSI) for safety breaches.
The court heard how NGNO, which maintains the gas distribution system across the north of England, has hired MSI to divert the gas mains on the ring road at Beeston. The work was being carried out to allow changes to the road layout. MSI was supervising but had sub-contracted parts of the project to two other firms.
The work meant installing a new section of gas mains to the existing system, which required welding work to be carried out on the mains in an excavation. The gas mains had not been adequately isolated and sparks from the hot welding work ignited the escaping gas.
HSE found that the two subcontractors were only competent in specific parts of the job and neither fully understood the overall work being carried out. Both NGNO and MSI failed to plan the necessary work effectively or provide the safety controls under which the work could be done.
Both companies pleaded guilty to a single offence under the Health and Safety at Work etc Act 1974. Northern Gas Networks Operations was fined £35,000 and ordered to pay £8,453 in costs. Morgan Sindall (Infrastructure) was fined £50,000 with £12,900 in costs.
After sentencing, HSE inspector Ian Redshaw said: "Someone could have been killed or badly injured in this incident. Thankfully no one was hurt, but this was a severe fire that was a danger to workers and local people.
"There were numerous failings by both companies in the planning, organisation and execution of the work - most importantly the failure to consider and control the risks associated with welding near live gas mains.
"When undertaking high hazard activities such as this, it is essential that the proper steps are taken to ensure that risks are fully considered and then controlled.
"This type of activity is regularly undertaken in the gas industry and all the safety practices are well established and common knowledge in the industry. Thankfully incidents are rare, but if they do occur the consequences can be devastating."