Paving crews using a piece of machinery damaged a 4-inch steel gas line at about 10:15 a.m. at 140th and Bancroft avenues, about three blocks from Jefferson Elementary School, Nauman said.
Fifteen people were evacuated from their homes, and the elementary school was told to shelter in place, Alameda County fire spokeswoman Aisha Knowles said.
The leak was capped at 1:45 p.m. but PG&E crews are expected to continue work on repairs through the afternoon, Nauman said.
Nauman said the work will likely last several hours.
Streets in the area remain closed. The affected area is roughly bounded by East 14th Street, Lark Street, 142nd Avenue and 139th Avenue.
San Leandro police are at the scene directing traffic around the area.