The explosion happened around 6 p.m. in the Grafton Harbor.
Witnesses told News 4 that a local couple, later identified as Dennis Day and Beverly Day, were pulling their old wooden boat in from the dock when it exploded.
"[I] noticed Dennis and Bev come in on their boat, I was getting ready to wave at them and all of a sudden a fireball just shot up and the boat went up in flames," said Brad Zucker.
Joe Palcheff saw the couple's heads sticking out from the water but didn't realize it was his dear friends before he jumped onto his jet ski to rescue them.
"I got out there and saw who it was and [I] know them personally so I was like oh my gosh its Dennis and Bev," Palcheff said, "they got the life jackets but everything was on fire and didn't know there was going to be another explosion so they kind of held on to the jet ski and pulled them into the dock .
According to Grafton Fire, the boat was completely destroyed by the explosion. The couple had recently restored their boat, named 'The Owen'.
Known as Captain Dennis and his first mate Bev, the couple were considered family to the Grafton community and those at the Harbor.
"Everybody loves them so much. There like the face of the area. Dennis is always around making jokes, being the jolly guy that he is," said Zucker.
Officials say both riders suffered non-life threatening burns but were airlifted to a local hospital.
The husband is in serious condition and the wife is in critical condition after being severely burned, according to officials.
The cause of the fire is yet known.