When she was young, Catherine my daughter had a video film which featured a Lava Demon skate-boarding down a river of molten lava, a great favourite with both of us. On the recent painting holiday to Iceland I met another, less dynamic lava demon in the great lava fields of Leirhnjukur, and of course just had to sketch him.....at least I assume it was male. He was about 60 to 80 feet high and belched steam out of his nostrils, as you can see in the watercolour sketch below.
Whether or not you wish to seek out the odd lava demon, the technique for rendering the steam emerging from his nostrils is just the same as for mist on mountain-tops or circling round crags: I normally use the wet-in-wet method, firstly liberally wetting the area where the steam or mist will appear, and a little way beyond, and then brushing in the colour of the mountain, rock or crag to shape the mist as required. You shouldn't have much water on the brush when you apply this colour. Sometimes I need to reshape the misty effect a little, and I do this as quickly as possible with a clean, damp brush, before it has a chance to dry. Note the undetailed shapes of rocks near the steam, and how they contrast with the strong darks of the strident foreground rocks.
Enjoy your hunting/sketching, but don't fall down any of those nasty steaming holes.