Security forces said an explosion in the second story of a three-story building killed two people. Sources told the official Saba news agency that authorities were removing around 500 detonators uncovered from the site.
Yemen is trying to control a southern secessionist movement, a Shiite rebellion in the north and a lingering threat from al-Qaida in the Arabian Peninsula, the Yemeni branch of al-Qaida.
The Australian government announced Monday it had listed AQAP on its national terrorism database for the first time following a similar move by Washington last year. The U.S. Treasury Department last week singled out AQAP leader Anwar al-Awlaki as a terrorist organizer.
"Anwar al-Awlaki has proven that he is extraordinarily dangerous, committed to carrying out deadly attacks on Americans and others worldwide," said Under Secretary for Terrorism and Financial Intelligence Stuart Levey
Awlaki in a statement published Monday by ABC News said the United States was headed for failure because of its imperial ambitions in the world.
"Imperial hubris is leading (America) to its fate: a war of attrition, a continuous hemorrhage that would end with the fall and splintering of the United States of America," he was quoted as saying.
Awlaki is said to have inspired the accused gunman in the Fort Hood, Texas, shooting rampage in November and the alleged would-be bomber of a U.S. passenger plane bound for Detroit on Christmas Day.
A U.S. intelligence official who reviewed the tape described Alwaki's message as "trash."