Route 204 which is right above Jubilife City. You have to go through a patch of grass to your left and surfacross a small pool of water. Once you get the incense, you can breed two marills ( a boy and a girl ) to get an azurill.
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the sea incense is found somewere in cerulean cave(which is in kanto)
in the lost cave on island five
it will let you breed munchlax's without the full incence you will get snorlax
Breed Marrill/Azumarril with Sea Incense attached.
it s found on the first floor of cerulean cave.