He can be found dead inside Moss Mother Cavern. He ventured there with Ari and Valdr to kill a bear. He and Ari were killed by a spriggan, leaving Valdr wounded, poisoned and awaiting assistance to avenge his and Ari's deaths, and give them proper burials.
If Moss Mother Cavern is visited after the events of the miscellaneous quest Hunter and Hunted, there are two small cairns outside the cave entrance. These likely represent where Niels and Ari are buried.
Valdr requires assistance at avenging the death of his friends, Ari and Niels.