A massive explosion at a machine shop ripped through a Houston, Texas, neighbourhood early Friday morning, killing at least two people and damaging homes while sending out blast waves for kilometres.

The explosion devastated a neighbourhood surrounding the Watson Grinding and Manufacturing building in northwest Houston, leaving behind collapsed and smouldering wreckage and knocking several homes off their foundations.

Houston Fire Chief Samuel Pena said early indications pointed to a leak of propylene gas, a colourless, flammable, liquefied gas with several industrial uses. But Houston Police Chief Art Acevedo cautioned the investigation could take several days, weeks or months.

"I thought it was thunder," said Bruce Meikle, 78, an owner of nearby manufacturer ChemSystems, who heard the explosion from his home about a mile (1.6km) from the scene.

The force of the blast bent the metal loading doors at his business and caused minor damage inside, he told Reuters News Agency.

A damaged building is seen at the Watson Grinding & Manufacturing grounds in Houston, Texas [Go Nakamura/Reuters]

Paul Crea, 59, a chemist who works for Meikle, said the blast woke him 10 miles (16 km) away in Katy, a Houston suburb, and his dogs bellowed at the sound.

The explosion "knocked us all out of our bed, it was so strong," Mark Brady told KPRC television. "It busted out every window in our house. It busted everybody's garage door in around here ... It's a warzone over here."

Numerous homes had their windows blown in. Others were surrounded by shattered piles of debris. One woman told a local news station that her roof collapsed and she needed to be rescued by neighbours.

Harris County Sheriff Ed Gonzalez said the blast was felt as far away as 14 miles (22 km), based on social media reports.

The moment of the explosion, around 4:25am CST (10:25 GMT), was captured on video by a home security camera. It showed a blinding flash in the distance followed by a fireball.

Acevedo, the police chief, stressed there was no evidence of foul play. In the meantime, investigators planned to survey the blast zone with drones, and Acevedo asked people as far as a mile (1.6 km) away to search their yards and neighborhoods for evidence.

"Look for any debris, any body parts, anything that may be related," Acevedo said.

Firefighters secured a 2,000-gallon (757-litre) propylene tank outside the building and would allow any remaining fires to burn out, Pena said.

Others fanned out to examine nearly 200 homes.

"Some of them are off the foundation, the ones especially that are closer to the explosion site," Pena said.

A temporary shelter was established for people left homeless.

Houston, a major hub for the oil and gas industry, is the fourth largest city in the United States with a population of some 2.3 million.