How about the Western Spruce Budworm Choristoneura occidentalis? This bug hits douglas-fir, all true firs, spruce and larch (may also be found on pine).
My source, Diseases & Insect Pests of Northern & Central Rocky Mountain Conifers, states that they may appear wherever hosts are found but significant damage is most often found on dry sites. Does that fit your scenario?
It also states, as UF's pine webworm, that "the larvae mine buds and old needles in the spring, consuming new foliage as it appears. Small larvae first seen in spring and early summer are light green to light brown with darker heads. Mature larvae have brown heads and bodies with prominent ivory-colored spots. They can be about one inch long when full grown. Pupae are 3/4" long and brown and are found in the nests from mid-July into August. Adults are mottled rust-brown and have a wingspan of about 7/8" long. Female moths lay eggs on needles in a shingle-like pattern in August. Larvae hatch and immediately seek a sheltered spot to overwinter."
A severe infestation can result in dieback and mortality. They also destroy cones and seeds.
If this is the bug, I would definitely cut out and destroy nests.
Sylvia
