The incident occurred on June 30 at Blue Origin's West Texas testing facility. On the condition of anonymity, CNBC spoke with people who watched the testing video and described a "dramatic explosion that destroyed the engine and heavily damaged the test stand infrastructure." 

The BE-4 engine that exploded was undergoing testing and was originally scheduled to be completed by the end of this month. Those people said the engine was destined to ship to Blue Origin's customer United Launch Alliance to power the Vulcan Centaur. The engines are also used to power Blue Origin's New Glenn rocket.

On Tuesday, Blue Origin confirmed to CNBC that it "ran into an issue while testing Vulcan's Flight Engine 3." 

"No personnel were injured and we are currently assessing root cause," the company said. "We already have proximate cause and are working on remedial actions."

No footage of the incident was released. Here's a 2019 test of a BE-4 rocket.