Gov. Frank Murkowski on Wednesday instituted a state hiring freeze, and said he would direct Attorney General David Marquez to investigate the "state's right to hold BP fully accountable for losses to the state."

Murkowski made the announcement three days after BP said it would shut down the Prudhoe Bay oil field near Alaska's north coast after a small leak was found.

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The expected loss of 400,000 barrels per day at today's oil prices means $6.4 million lost daily in royalties and taxes, Revenue Commissioner Bill Corbus said.

The state receives 89 percent of its income from oil revenue.

"BP must get the entire Prudhoe Bay back up and running as soon as it is safely possible," Murkowski told a joint session of the state Legislature.

Murkowski also said he will appoint a state cabinet, led by Natural Resources Commissioner Mike Menge, to deal with the Prudhoe Bay shutdown, "to make certain we retain the ability to exercise all of Alaska's prerogatives under our Prudhoe Bay leases, unit agreements, state laws and rights of way agreements."

He said the state intends to carefully scrutinize BP's plans to protect the environment from future damage and plans to resume operations.

He said he was ensuring all Alaskans that the state will hold BP responsible.

Murkowski questioned why BP abruptly decided to shut down the entire Prudhoe Bay field when there was only a small leak. The company made the decision to shutter the field and conduct further testing after finding a leak of 4 to 5 barrels.

"What did BP learn last Sunday that it did not know previously that would cause BP to take such precipitous action?" Murkowski said.

Murkowski said he is concerned the state was not consulted before the decision was made.

Murkowski said there is discussion that BP may continue some production on the western side of Prudhoe Bay, but no decision has been made. BP officials have indicated that decision could be made by Friday.

The hiring freeze will be in place until more information is known about the duration of the Prudhoe Bay oil field shutdown, he said.

State officials also will prepare a management plan to protect public services while they determine how long the Prudhoe Bay oil field will be shut down.

The shutdown of Prudhoe Bay, Murkowski said, has become a national issue because of the amount of reduced oil available and the impact on refineries in California, Washington and Oregon that the governor said were heavily dependent on Alaska oil.

Murkowski took the opportunity to encourage legislators to get behind his proposal reached with North Slope producers to build a $25 billion dollar natural gas pipeline to Canada.

"I would ask all of you to please pull together with our administration and the producers so we can work as Alaskans through the challenge ahead," he said. "We simply have to get it done."

An uneasy Legislature is wary that Murkowski wants to give up too much to reach that goal, to the point that most say they won't ratify his contract with producers as presented. It appeared unlikely the governor would get support for the contract before lawmakers end their special session Thursday.

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