Head north and defeat the elves then check the wooden crate for some Fire Bombs. Use the bombs to light the areas indicated by arrows through out the alienage. Light the alienage tree to start the quest “ Slaughter the Elves “, which will summon Zevran and more elves. Lighting them is a good way to make quick work of them and don’t forget to enthrall the Hurlock Emissary. Zevran drops a Crow Dagger and Antivan Leather Boots and there are two wooden crates that can be looted on the western end of the alienage, the northern one is guarded by Valendrian who drops an Enchanted Dagger and Tribal Necklace . With the quest completed go north and exit to the Palace District.

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You need to use either the Fire Bombs or the Fireball spell to set fire to things. You will meet Zevran later on whom you can kill.