Arcane Essence is a resource that is used for various purposes, such as enchantment & transmutation. Arcane Essence can be found inside Sepulchers of Magic, where wandering specters can be slain in order to obtain this resource.
Arcane Essence has various uses. Arcane Essence is used to create enchanted Potions. Arcane Essence can also be used to create Runes through the process of Transmutation. This can be done at the Artifact Foundry or the Energy Manipulator.