This is a water heater temperature, pressure safety valve.
When something goes wrong within the water heater, the safety valve is designed to open and release high temperature water and excessive pressure through a discharge pipe to the exterior of the house.
Here, there is no discharge pipe and the safety valve was plugged, probably by a home owner who saw water dripping from the valve.
This is a recipe for disaster.
If the gas flame that heats the water in a gas-fired water heater fails to turn off at a set water temperature – the water temperature and tank pressure will increase – and at some point there will be an explosion of the tank.
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