A Plague Upon Thee

Now that we have plenty of termites, take this steel reinforced barrel to the Northridge Lumber Mill south of Hearthglen--you'll find it to the west of the road that leads you up to the town.

Once there, place the barrel in the center of the lumber mill; someplace high, like on a crate or something.

After you open it, the rest should take care of itself. Just come back here and I'll reward you for helping me.

The termites are obviously getting restless as you place the barrel on top of the crate.