An oil spill response is underway in Picton as diesel leaks from a Kiwirail shunt train which is submerged in the town's harbour.
The remote-controller shunt locomotive, which was used in marshalling yards, and a railway wagon fell into the harbour in Waitohi Picton on Wednesday afternoon.
No one was injured in the incident.
As a result, the harbourmaster closed the port and Kiwirail temporarily suspended the Interislanders services.
Marlborough District Council confirmed on Thursday an oil spill response operation has been underway.
Regional onsite commander Luke Grogan, who is also the Marlborough harbourmaster, said the locomotive is lying in approximately 10 metres of water.
"The locomotive has a diesel fuel tank with a capacity of 1000 litres and contains other engine lubricants. The exact quantity of diesel on-board is unknown," he said.
"Diesel is leaking at a slow rate from the unit and our estimates at this stage are that less than 15 litres has been discharged so far. The diesel is probably leaking from a fuel breather pipe which our divers are hoping to block. Other options to further prevent discharge are also being evaluated."
He said the oil spill response team has surrounded the site with spill containment and sorbent booms while they work to recover what is in the boomed area.
KiwiRail is currently developing a plan on how to remove the locomotive, which Grogan said will happen on Friday at the earliest.
"Our concerns for wildlife impacts at this stage centre on the potential risk to blue penguins should a significant discharge occur. However we do have time to attempt to mitigate that risk.
"Everyone working on the spill response is a member of Marlborough's regional Oil Spill Response Team and are working to ensure that we operate under the Government's COVID-19 guidelines for alert level 3."
