Yes, it is possible, when a temperature pressure relief valve has been removed and the pipe has been capped (sealed Off) the water heater tank can explode if enough pressure builds up because the tank has no way to relieve the pressure. This is a very dangerous condition however I do find it occasionally as pictured.
This is how i describe this condition to my home inspection clients:
Not Acceptable Immediate Attention Required: TPR Discharge Valve is missing and pipe is capped. This condition poses an immediate safety hazard for occupants. The tank has no way to release pressure which can result in the water heater exploding in the event extreme pressure builds up inside tank.
What is a TPR Valve?
Temperature/pressure-relief or TPR valves are safety devices installed on water heating appliances, such as boilers and domestic water supply heaters. TPRs are designed to automatically release water if pressure or temperature in the water tank exceeds safe levels. The TPR valve will activate if either water temperature (measured in degrees Fahrenheit) or pressure (measured in pounds per square inch [PSI]) exceed safe levels. The valve should be connected to a discharge pipe (also called a drain line) that runs down the length of the water heater tank. This pipe is responsible for routing hot water released from the TPR to a proper discharge location. This discharge tube should be no higher than 6″ off the floor if installed at exterior wall. If installed inside home it should terminate to exterior thru the wall or thru the floor in crawl space to exterior. Recommend immediate further evaluation by qualified licensed plumber Now.