Ice Essence is made in an Essence Refiner; the materials needed are 2 Ice, 2 Snow Blocks, and 1 Arcane Ash. It can also be acquired by killing the Ice Guardian.
In the essence refiner, this is the placement required to successfully create the essence.
Snow and ice can be switched.
The Ice Essence also costs 100 neutral essence, which is made using by burning Vinteum Dust in the Obelisk.