The gas distributor was found guilty of breaching Section 3 of the Health and Safety at Work Act.
It was fined £1 million and with over 26,000 in costs.
Sheffield Crown Court heard the company was supervising repairs to a gas mains in Ashby Road, Scunthorpe on 24 June 2014.
However, a worker who was part of the repair team became trapped between two gas pipes after one of them burst, breaking his femur.
Footage of the incident shows how the fire service had zero visibility as they worked for an hour to rescue the trapped engineer, as the escaping gas was creating a cloud of dust and debris around the excavation.
Group Manager Steve Fraser of Humberside Fire and Rescue Service said: "The priority when we arrived was the injured man, and getting him out of immediate danger.
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"The visibility was virtually zero due to air being dense with gas and dust, and the man had been working 10 feet below ground.
"The crews put themselves in a position which showed courage and bravery of the highest order. They were dealing with gas of an unknown quantity with potential for another explosion.
"They used pneumatic bags to prise the pipes apart and release his legs, all done in demanding circumstances."
The Health and Safety Executive (HSE) said fact the worker was wearing breathing apparatus undoubtedly saved his life.
As a result of the incident, the road was closed to traffic and local residents had to be evacuated for fear of an explosion while it took three hours to get the gas under control and pipe repaired.
Failings by National Grid included not complying with its own gas escape procedures, not carrying out sufficient risk assessments, not communicating effectively with the contractors carrying out the work and not managing the handover of key personnel.
HSE Inspector Ian Redshaw said: "This incident could easily have become a fatality. National Grid Gas (Plc) failed to follow its own processes and carry out sufficient risk assessments to protect workers and the sub-contractors fixing the leak.
"This whole incident should act as a stark warning to all those involved in hazardous work – you can have all the written policies in place but it you do not follow them, if you do not carry out the risk assessments for the task, people could die."
(LM/MH)
