Information courtesy Colorado State Forest Service and District Forester Damon Lange.
‘The spruce beetle (Dendroctonus rufipennis) is responsible for the death of more spruce trees
in North America than any other natural agent. Spruce beetle populations range from Alaska and
Newfoundland to as far south as Arizona and New Mexico. The subalpine Engelmann spruce is the
primary host tree, but the beetles will infest any spruce tree species within their geographical range, including blue spruce. In Colorado, the beetles are most commonly observed in high-elevation spruce forests above 9,000 feet.’ — CSFS Quick Guide
Spruce Beetle epidemic in the San Juans — youtube video from the 2012 Society of American Foresters meeting.
The small holes are where the beetles exit; the large holes are where the birds (mainly woodpeckers) are eating the larvae. The large sap residue on the left is from a wound to the tree; it probably lost a branch there.
This tree sloughed off its bark to reveal a spruce beetle larvae gallery. The larvae hatch in the dark section at center, then each larva takes its own path, eating the cambium layer of tree, heading towards the left. Then they emerge out of the tree as adults.