"The arm/hand was carried away in an ice bucket."
Welthorpe said she was on the sun deck at the time of the explosion, directly above deck seven where the "very, very loud" explosion happened.
Passengers were told the crew member was filling the cylinder when it exploded.
"The atmosphere on board is extremely sombre," the New South Wales resident said.
"I saw a number of passengers crying.
"No one wants to die at work."
She added: "Imagine being away from home on this ship for nine months without seeing any of your loved ones and then something like this happens to one of your colleagues," she said.
"Just dreadful."
Inspector Jason Guthrie said this morning a scene examination had been completed and the accident would be investigated by the Transport Accident Investigation Commission (TAIC).
"The crew member who died is a Filipino man and police are working with the cruise liner to support his family at this sad time.
"The matter has been referred to the Coroner."
WorkSafe New Zealand and Maritime New Zealand had also been consulted, he said.
Two TAIC investigators dre due to arrive at Port Chalmers to begin their investigation this morning. At this stage it's not known how long the investigators will be on board or whether the ship will move.
"The Bermuda authorities where the ship is registered have been informed that an investigation by the commission is under way."
Emerald Princess was due to sail from Port Chalmers at 6pm yesterday, but remained in port last night after the tragedy.
The ship arrived from Akaroa about 7.45am yesterday and was due to sail to Fiordland.
Welthorpe said passengers were told last night it would now sail directly to Sydney.
Port Otago chief executive Geoff Plunket said the ship would not leave the port until receiving Maritime New Zealand clearance.
Passengers were on the wharf walking back to the ship at the time of the explosion, he said.
However, none was injured by the falling gas cylinder.
"Passengers who were returning to the ship at the time of the explosion were held in Port Otago's cruise facility and then taken directly to the ship's gangway by bus," he said.
Carnival Australia corporate communication manager David Jones said the cruise operator was assisting authorities with their investigations.
"First reports indicate that the incident happened during some technical work on the hydraulic launching system on a tender vessel," he said.
"We are working closely with local police and other authorities and assisting in their response and inquiries.
"We are deeply saddened that a member of Emerald Princess' crew was fatally injured."
A St John spokesman said the crew member died at the scene of the explosion and although an ambulance was dispatched, it was not used.
It is understood the man suffered horrific injuries.
Maritime Union Port Chalmers-Dunedin secretary Phil Adams said he was working in the port's control room when he heard the "massive explosion".
"Man, I've never heard an explosion like it in my life," he said.
"I'd say most of Port [Chalmers] felt it."
The union was not involved in the investigations into the man's death, but would assist if required, he said.
Port Chalmers Volunteer Fire Brigade Chief Fire Officer Stephen Hill said firefighters secured the scene before turning it over to police.
It was believed the cylinder that exploded contained nitrogen, he said.
