FORM 10-K
                    SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549
(Mark One)

[x]    Annual  report  pursuant to Section 13 or 15(d)  of  the  Securities
       Exchange Act of 1934 [Fee Required]

For the fiscal year ended December 31, 1998

                                    OR

[ ]    Transition  report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 [No Fee Required]

For the transition period from                      to

Commission File Number 0-16494

        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                (Exact name of registrant as specified in
                    its limited partnership agreement)

Delaware                                                     75-2220418
(State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                       Identification No.)

407 N. Big Spring, Suite 300, Midland, Texas                   79701
(Address of principal executive office)                     (Zip Code)

Registrant's telephone number, including area code (915) 686-9927

       Securities registered pursuant to Section 12(b) of the Act:

                                   None

       Securities registered pursuant to Section 12(g) of the Act:

                      limited partnership interests

Indicate by check mark whether registrant (1) has filed reports required to
be  filed  by  Section 13 or 15(d) of the Securities Exchange Act  of  1934
during  the  preceding  12  months (or for such  shorter  period  that  the
registrant was required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days:     Yes   x    No

Indicate by check mark if disclosure of delinquent filers pursuant to  Item
405  of  Regulation S-K (229.405 of this chapter) is not contained  herein,
and  will  not  be  contained,  to the best of registrant's  knowledge,  in
definitive  proxy or information statements incorporated  by  reference  in
Part III of this Form 10-K or any amendment to this Form 10-K.     [x]

The  registrant's  outstanding  securities  consist  of  Units  of  limited
partnership  interests for which there exists no established public  market
from which to base a calculation of aggregate market value.

The  total  number of pages contained in this report is ___.  There  is  no
exhibit index.

<PAGE>
                            Table of Contents

Item                                                                   Page

                                  Part I

 1.  Business                                                            3

 2.  Properties                                                          7

 3.  Legal Proceedings                                                   9

 4.  Submission of Matters to a Vote of Security Holders                 9

                                 Part II

 5.  Market for Registrant's Common Equity and Related
     Stockholder Matters                                                10

 6.  Selected Financial Data                                            11

 7.  Management's Discussion and Analysis of
     Financial Condition and Results of Operations                      12

 8.  Financial Statements and Supplementary Data                        21

 9.  Changes in and Disagreements with Accountants
     on Accounting and Financial Disclosure                             38

                                 Part III

10.  Directors and Executive Officers of the Registrant                 39

11.  Executive Compensation                                             42

12.  Security Ownership of Certain Beneficial Owners and
     Management                                                         42

13.  Certain Relationships and Related Transactions                     44

                                 Part IV

14.  Exhibits, Financial Statement Schedules, and Reports
     on Form 8-K                                                        45

     Signatures                                                         46

<PAGE>
                                  Part I

Item 1.   Business

General
Southwest   Royalties   Institutional  Income  Fund   VIII-B,   L.P.   (the
"Partnership"  or  "Registrant")  was  organized  as  a  Delaware   limited
partnership  on  November 30, 1987.  The offering  of  limited  partnership
interests  began  March 31, 1988, reached minimum capital  requirements  on
July  11,  1988  and concluded on March 31, 1989.  The Partnership  has  no
subsidiaries.

The  Partnership  has  expended  its  capital  and  acquired  interests  in
producing oil and gas properties.  After such acquisitions, the Partnership
has  produced and marketed the crude oil and natural gas produced from such
properties.  In most cases the Partnership purchased royalty or  overriding
royalty interests and working interests in oil and gas properties that were
converted into net profits interests or other nonoperating interests.   The
Partnership  purchased  either all or part of the  rights  and  obligations
under various oil and gas leases.

The  principal executive offices of the Partnership are located at  407  N.
Big Spring, Suite 300, Midland, Texas, 79701.  The Managing General Partner
of  the  Partnership,  Southwest Royalties,  Inc.  (the  "Managing  General
Partner")   and  its  staff  of  98  individuals,  together  with   certain
independent  consultants  used  on an "as needed"  basis,  perform  various
services on behalf of the Partnership, including the selection of  oil  and
gas properties and the marketing of production from such properties.  H. H.
Wommack,  III,  a  stockholder, director, President and  Treasurer  of  the
Managing  General Partner, is also a general partner.  The Partnership  has
no employees.

Principal Products, Marketing and Distribution
The  Partnership has acquired and holds royalty interests  and  net  profit
interests  in oil and gas properties located in New Mexico and Texas.   All
activities  of  the  Partnership are confined  to  the  continental  United
States.   All  oil  and  gas  produced from these  properties  is  sold  to
unrelated third parties in the oil and gas business.

The  revenues  generated from the Partnership's oil and gas activities  are
dependent upon the current market for oil and gas.  The prices received  by
the Partnership for its oil and gas production depend upon numerous factors
beyond   the   Partnership's  control,  including  competition,   economic,
political  and regulatory developments and competitive energy sources,  and
make it particularly difficult to estimate future prices of oil and natural
gas.

<PAGE>
During 1998 oil prices fell to their lowest daily levels since 1986 and  to
their lowest annual average since 1976.  In two years, oil prices have been
sliced  by  more  than half.  The factors that started the decline  in  oil
prices in 1997 are the same ones that have kept them down in 1998.  It  was
believed  that there would be continued heavy consumption coming  from  the
Asian  region, but the collapse of their markets late in 1997 carried  over
to  this year bringing demand down with it.  Asian consumption had all  but
disappeared  in  1998, creating an oversupply of crude oil on  the  market.
That  drop  in  demand has lasted longer than anyone had  anticipated,  but
hopes  of  a  recovery abound.  Another reason for the  continued  drop  in
prices  has  been OPEC's unwillingness to completely comply with production
cuts  established in March and again in June.  Although they have been near
90%  compliance at times, they have also been below 70% on a monthly basis.
Even  a  four-day bombing in December of Iraqi military sites could  create
only a one-day rally in oil prices.  Crude oil closed December 31, 1998  at
$12.05  per  barrel  on the NYMEX and posted prices  closed  at  $9.50  per
barrel.

In  a  year  of fairly optimistic expectations for gas prices, the  average
price  of natural gas wound up declining in 1998 to its lowest level  since
1995.   Although the nationwide average did remain above $2.00  per  MMBTU,
1998's  prices were approximately 17% lower than those seen in  1997.   The
combination  of mild weather throughout the year and a gas storage  surplus
both  contributed to the low prices.  Analysts' predictions for 1999 prices
vary,  ranging from a low of $1.87 per MMBTU to a high of $2.40 per  MMBTU.
Reduced  production  throughout the U.S. industry,  along  with  large  gas
storage  withdrawals during the first weeks of January 1999, are  both  key
factors  in  our belief that the 1999 average gas price will remain  around
$1.80 per MMBTU level.

Following  is a table of the ratios of revenues received from oil  and  gas
production for the last three years:

                                  Oil          Gas

                    1998          86%          14%
                    1997          87%          13%
                    1996          88%          12%

As  the table indicates, the majority of the Partnership's revenue is  from
its   oil  production;  therefore,  Partnership  revenues  will  be  highly
dependent upon the future prices and demands for oil.

Seasonality of Business
Although the demand for natural gas is highly seasonal, with higher  demand
in  the colder winter months and in very hot summer months, the Partnership
has  been able to sell all of its natural gas, either through contracts  in
place or on the spot market at the then prevailing spot market price.  As a
result,  the volumes sold by the Partnership have not fluctuated materially
with the change of season.

<PAGE>
Customer Dependence
No  material portion of the Partnership's business is dependent on a single
purchaser,  or a very few purchasers, where the loss of one  would  have  a
material  adverse impact on the Partnership.  Two purchasers accounted  for
74%  of  the  Partnership's  total  oil and  gas  production  during  1998:
Scurlock  Permian  LLC  for  50%,  and  Mobil  Corporation  for  24%.   Two
purchasers  accounted  for  73%  of the Partnership's  total  oil  and  gas
production  during 1997:  Scurlock Permian Corporation for 50%,  and  Mobil
Corporation for 23%.  Two purchasers accounted for 77% of the Partnership's
total oil and gas production during 1996:  Scurlock Permian Corporation 52%
and Mobil Corporation 25%.  All purchasers of the Partnership's oil and gas
production  are  unrelated  third parties.   In  the  event  any  of  these
purchasers were to discontinue purchasing the Partnership's production, the
Managing General Partner believes that a substitute purchaser or purchasers
could be located without undue delay.  No other purchaser accounted for  an
amount  equal to or greater than 10% of the Partnership's sales of oil  and
gas production.

Competition
Because  the  Partnership has utilized all of its funds available  for  the
acquisition  of net profits or royalty interests in producing oil  and  gas
properties,  it  is  not  subject to competition from  other  oil  and  gas
property purchasers.  See Item 2, Properties.

Factors  that  may  adversely  affect the  Partnership  include  delays  in
completing  arrangements  for  the sale of production,  availability  of  a
market for production, rising operating costs of producing oil and gas  and
complying  with  applicable  water  and  air  pollution  control  statutes,
increasing  costs  and  difficulties of transportation,  and  marketing  of
competitive  fuels.   Moreover, domestic oil  and  gas  must  compete  with
imported oil and gas and with coal, atomic energy, hydroelectric power  and
other forms of energy.

Regulation

Oil  and Gas Production - The production and sale of oil and gas is subject
to  federal and state governmental regulation in several respects, such  as
existing price controls on natural gas and possible price controls on crude
oil,  regulation of oil and gas production by state and local  governmental
agencies, pollution and environmental controls and various other direct and
indirect   regulation.    Many  jurisdictions  have  periodically   imposed
limitations on oil and gas production by restricting the rate of  flow  for
oil  and  gas wells below their actual capacity to produce and by  imposing
acreage limitations for the drilling of wells.  The federal government  has
the  power  to  permit increases in the amount of oil imported  from  other
countries and to impose pollution control measures.

<PAGE>
Various  aspects of the Partnership's oil and gas activities are  regulated
by  administrative agencies under statutory provisions of the states  where
such  activities  are  conducted and by certain  agencies  of  the  federal
government for operations on Federal leases.  Moreover, certain  prices  at
which the Partnership may sell its natural gas production are controlled by
the  Natural Gas Policy Act of 1978, the Natural Gas Wellhead Decontrol Act
of  1989  and the regulations promulgated by the Federal Energy  Regulatory
Commission.

Environmental  - The Partnership's oil and gas activities  are  subject  to
extensive  federal,  state  and local laws and  regulations  governing  the
generation,  storage, handling, emission, transportation and  discharge  of
materials into the environment.  Governmental authorities have the power to
enforce compliance with their regulations, and violations carry substantial
penalties.   This  regulatory burden on the oil and gas industry  increases
its cost of doing business and consequently affects its profitability.  The
Managing  General  Partner  is  unable to  predict  what,  if  any,  effect
compliance will have on the Partnership.

Industry  Regulations  and  Guidelines - Certain industry  regulations  and
guidelines  apply to the registration, qualification and operation  of  oil
and  gas programs in the form of limited partnerships.  The Partnership  is
subject  to  these  guidelines  which regulate  and  restrict  transactions
between the Managing General Partner and the Partnership.

The  Partnership  complies with these guidelines and the  Managing  General
Partner  does not anticipate that continued compliance will have a material
adverse effect on Partnership operations.

Partnership Employees
The  Partnership has no employees; however the Managing General Partner has
a  staff of geologists, engineers, accountants, landmen and clerical  staff
who  engage in Partnership activities and operations and perform additional
services  for  the  Partnership as needed.  In  addition  to  the  Managing
General  Partner's  staff, the Partnership engages independent  consultants
such  as petroleum engineers and geologists as needed.  As of December  31,
1998,  there were 98 individuals directly employed by the Managing  General
Partner in various capacities.

<PAGE>
Item 2.   Properties

In  determining whether an interest in a particular producing property  was
to  be  acquired, the Managing General Partner considered such criteria  as
estimated  oil  and  gas reserves, estimated cash flow  from  the  sale  of
production,  present  and  future prices of oil  and  gas,  the  extent  of
undeveloped  and  unproved reserves, the potential for secondary,  tertiary
and other enhanced recovery projects and the availability of markets.

As  of December 31, 1998, the Partnership possessed an interest in oil  and
gas  properties  located in Eddy and Lea Counties of New  Mexico;  Andrews,
Borden,   Cochran,  Crane,  Crockett,  Dawson,  Dimmitt,   Gaines,   Garza,
Glasscock, Hockley, Martin, Nolan, Pecos, Reagan, Reeves, Scurry, Sterling,
Stonewall, Terry, Winkler, Ward, Yoakum and Zavala Counties of Texas.   The
Partnership owns royalty interests and net profit interests in  the  wells;
however,  a substantial majority of the interests are net profit interests.
These  properties consist of various interests in approximately 2,469 wells
and units.

Due  to  the  Partnership's  objective of  maintaining  current  operations
without engaging in the drilling of any developmental or exploratory wells,
or  additional acquisitions of producing properties, there has not been any
significant changes in properties during 1998, 1997 and 1996.

During  1998,  twelve leases were sold for approximately  $10,800.   During
1997, three leases were sold for approximately $47,800.  During 1996, there
were no property sales.



<PAGE>
Significant Properties
The  following  table  reflects the significant  properties  in  which  the
Partnership has an interest:

                         Date
                      Purchased         No. of         Proved Reserves*
Name and Location    and Interest       Wells      Oil (bbls)    Gas (mcf)
-----------------    ------------       -----      ----------    ---------

Rasmussen             6/89 at 1.5%        40        45,000         40,000
Winkler County,       to 19% royalty
Texas                 and net profits
                      interest

Mobil                 4/89 at 5% to      398        37,000         36,000
Ward and Reeves       50% net profits
Counties, Texas       interest

North American        3/89 at 50% to       3        55,000              -
Royalties             100% net profits
Yoakum County,        interest
Texas

*Ryder  Scott Company Petroleum Engineers prepared the reserve and  present
value data for 96.4% of the Partnership's existing properties as of January
1,  1999.   Another independent petroleum engineer prepared  the  remaining
3.6%  of the Partnership's properties.  The reserve estimates were made  in
accordance  with  guidelines  established by the  Securities  and  Exchange
Commission  pursuant  to Rule 4-10(a) of Regulation S-X.   Such  guidelines
require oil and gas reserve reports be prepared under existing economic and
operating  conditions  with  no provisions for price  and  cost  escalation
except by contractual arrangements.

The  New York Mercantile Exchange price at December 31, 1998 of $12.05  was
used  as the beginning basis for the oil price.  Oil price adjustments from
$12.05  per  barrel were made in the individual evaluations to reflect  oil
quality,  gathering and transportation costs.  The results are  an  average
price received at the lease of $10.11 per barrel in the preparation of  the
reserve report as of January 1, 1999.

In  the  determination of the gas price, the New York  Mercantile  Exchange
price  at December 31, 1998 of $1.95 was used as the beginning basis.   Gas
price   adjustments  from  $1.95  per  Mcf  were  made  in  the  individual
evaluations to reflect BTU content, gathering and transportation costs  and
gas processing and shrinkage.  The results are an average price received at
the  lease of $1.86 per Mcf in the preparation of the reserve report as  of
January 1, 1999.

<PAGE>
As  also discussed in Part II, Item 7, Management's Discussion and Analysis
of  Financial Condition and Results of Operations, oil and gas prices  were
subject to frequent changes in 1998.

The  evaluation  of  oil and gas properties is not  an  exact  science  and
inevitably involves a significant degree of uncertainty, particularly  with
respect to the quantity of oil or gas that any given property is capable of
producing.   Estimates  of  oil and gas reserves  are  based  on  available
geological and engineering data, the extent and quality of which  may  vary
in  each  case  and,  in  certain instances, may prove  to  be  inaccurate.
Consequently,  properties may be depleted more rapidly than the  geological
and engineering data have indicated.

Unanticipated  depletion, if it occurs, will result in lower reserves  than
previously  estimated; thus an ultimately lower return for the Partnership.
Basic  changes in past reserve estimates occur annually.  As  new  data  is
gathered  during the subsequent year, the engineer must revise his  earlier
estimates.  A year of new information, which is pertinent to the estimation
of  future  recoverable volumes, is available during  the  subsequent  year
evaluation.   In applying industry standards and procedures, the  new  data
may cause the previous estimates to be revised.  This revision may increase
or  decrease the earlier estimated volumes.  Pertinent information gathered
during the year may include actual production and decline rates, production
from  offset  wells  drilled to the same geologic formation,  increased  or
decreased water production, workovers, and changes in lifting costs,  among
others.   Accordingly,  reserve  estimates are  often  different  from  the
quantities of oil and gas that are ultimately recovered.

The  Partnership  has  reserves which are classified  as  proved  developed
producing, proved developed non-producing and proved undeveloped.   All  of
the  proved reserves are included in the engineering reports which evaluate
the Partnership's present reserves.

Because  the  Partnership  does  not engage  in  drilling  activities,  the
development of proved undeveloped reserves is conducted pursuant  to  farm-
out  arrangements  with  the Managing General Partner  or  unrelated  third
parties.  Generally, the Partnership retains a carried interest such as  an
overriding  royalty  interest under the terms of a  farm-out,  or  receives
cash.

The  Partnership or the owners of properties in which the Partnership  owns
an  interest  can  engage  in workover projects or  supplementary  recovery
projects, for example, to extract behind the pipe reserves which qualify as
proved developed non-producing reserves.  See Part II, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations.

Item 3.  Legal Proceedings

There are no material pending legal proceedings to which the Partnership is
a party.

Item 4.  Submission of Matters to a Vote of Security Holders

No  matter  was submitted to a vote of security holders during  the  fourth
quarter of 1998 through the solicitation of proxies or otherwise.

<PAGE>
                                 Part II


Item 5.  Market  for the Registrant's Common Equity and Related Stockholder
         Matters

Market Information
Limited  partnership interests, or units, in the Partnership were initially
offered and sold for a price of $500.  Limited partner units are not traded
on  any  exchange  and there is no public or organized trading  market  for
them.  The Managing General Partner has become aware of certain limited and
sporadic transfers of units between limited partners and third parties, but
has no verifiable information regarding the prices at which such units have
been  transferred.   Further,  a transferee may  not  become  a  substitute
limited partner without the consent of the Managing General Partner.

After  completion of the Partnership's first full fiscal year of operations
and each year thereafter, the Managing General Partner has offered and will
continue  to  offer  to  purchase each limited partner's  interest  in  the
Partnership,  at a price based on tangible assets of the Partnership,  plus
the  present  value  of  the future net revenues  of  proved  oil  and  gas
properties,  minus liabilities with a risk factor discount of  up  to  one-
third  which  may  be implemented in the sole discretion  of  the  Managing
General  Partner.   However, the Managing General Partner's  obligation  to
purchase  limited partner units is limited to an expenditure of  an  amount
not  in  excess  of  10%  of  the  total limited  partner  units  initially
subscribed  for by limited partners.  In 1998, 339.5 limited partner  units
were  tendered  to  and  purchased by the Managing General  Partner  at  an
average base price of $108.56 per unit.  In 1997, 44 limited partner  units
were  tendered  to  and  purchased by the Managing General  Partner  at  an
average base price of $286.98 per unit.  In 1996, 117 limited partner units
were  tendered  to  and  purchased by the Managing General  Partner  at  an
average base price of $161.94 per unit.

Number of Limited Partner Interest Holders
As of December 31, 1998, there were 601 holders of limited partner units in
the Partnership.

Distributions
Pursuant  to Article IV, Section 4.01 of the Partnership's Certificate  and
Agreement  of  Limited Partnership "Net Cash Flow" is  distributed  to  the
partners  on  a  monthly basis.  "Net Cash Flow" is defined  as  "the  cash
generated  by  the  Partnership's investments  in  producing  oil  and  gas
properties,  less  (i)  General and Administrative  Costs,  (ii)  Operating
Costs,  and  (iii) any reserves necessary to meet current  and  anticipated
needs  of  the  Partnership, as determined in the sole  discretion  of  the
Managing General Partner."

<PAGE>
During  1998,  distributions  were made totaling  $240,472,  with  $218,472
distributed  to  the limited partners and $22,000 to the general  partners.
For  the  year ended December 31, 1998, distributions of $21.53 per limited
partner   unit   were  made,  based  upon  10,147  limited  partner   units
outstanding.   The decline in distributions experienced  in  1998  will  be
expected  to  continue  into  1999 based on the  continued  low  oil  price
economy.   During  1997, twelve monthly distributions  were  made  totaling
$581,000, with $522,900 distributed to the limited partners and $58,100  to
the  general partners.  For the year ended December 31, 1997, distributions
of  $51.53  per  limited partner unit were made, based upon 10,147  limited
partner units outstanding.  During 1996, twelve monthly distributions  were
made  totaling $605,540, with $545,540 distributed to the limited  partners
and $60,000 to the general partners.  For the year ended December 31, 1996,
distributions  of  $53.76 per limited partner unit were  made,  based  upon
10,147 limited partner units outstanding.

Item 6.  Selected Financial Data

The  following  selected financial data for the years  ended  December  31,
1998,  1997,  1996,  1995 and 1994 should be read in conjunction  with  the
financial statements included in Item 8:

                                      Years ended December 31,
                      --------------------------------------------------------
                          1998      1997       1996       1995       1994
                          ----      ----       ----       ----       ----

Revenues           $   197,832    575,325    747,610    441,538    346,280

Net income (loss)    (398,635)    319,497    558,108    230,759    113,476

Partners' share
 of net income
  (loss):

  General partners      10,699     49,450     66,611     35,776     25,748

  Limited partners   (409,334)    270,047    491,497    194,983     87,728

Limited partners'
 net income (loss)
  per unit             (40.34)      26.61      48.44      19.22        8.65

Limited partners'
 cash distributions
  per unit               21.53      51.53      53.76      33.00      22.31

Total assets       $   580,626  1,219,313  1,480,875  1,528,291  1,666,483

<PAGE>
Item 7.   Management's  Discussion and Analysis of Financial Condition  and
          Results of Operations

General
The  Partnership was formed to acquire nonoperating interests in  producing
oil  and  gas  properties, to produce and market crude oil and natural  gas
produced  from  such  properties and to distribute any  net  proceeds  from
operations  to  the  general  and  limited  partners.   Net  revenues  from
producing  oil  and  gas  properties are not reinvested  in  other  revenue
producing  assets except to the extent that producing facilities and  wells
are  reworked  or  where  methods are employed to improve  or  enable  more
efficient  recovery  of oil and gas reserves.  The  economic  life  of  the
Partnership thus depends on the period over which the Partnership's oil and
gas reserves are economically recoverable.

Increases   or   decreases   in  Partnership   revenues   and,   therefore,
distributions  to partners will depend primarily on changes in  the  prices
received  for  production,  changes in volumes of  production  sold,  lease
operating  expenses, enhanced recovery projects, offset drilling activities
pursuant  to  farm-out arrangements and on the depletion of  wells.   Since
wells  deplete over time, production can generally be expected  to  decline
from year to year.

Well  operating costs and general and administrative costs usually decrease
with   production   declines;  however,  these  costs  may   not   decrease
proportionately.   Net  income available for distribution  to  the  limited
partners  is therefore expected to fluctuate in later years based on  these
factors.

Based on current conditions, management anticipates performing no workovers
during  1999  to  enhance  production.  With  expected  price  improvement,
workovers may be performed in the year 2002.  The partnership may  have  an
increase  in  the  year 2002, otherwise, the Partnership will  most  likely
experience it's historical decline of approximately 7% to 8% per year.

<PAGE>
Results of Operations

A.  General Comparison of the Years Ended December 31, 1998 and 1997

The  following  table  provides certain information  regarding  performance
factors for the years ended December 31, 1998 and 1997:

                                                  Year Ended     Percentage
                                                 December 31,     Increase
                                                1998      1997   (Decrease)
                                                ----      ----   ---------
Average price per barrel of oil            $    12.86    19.51    (34%)
Average price per mcf of gas               $     1.96     2.58    (24%)
Oil production in barrels                      48,700   49,200     (1%)
Gas production in mcf                          52,300   56,400     (7%)
Income from net profits interests          $  195,313  563,071    (65%)
Partnership distributions                  $  240,472  581,000    (59%)
Limited partner distributions              $  218,472  522,900    (58%)
Per unit distribution to limited partners  $    21.53    51.53    (58%)
Number of limited partner units                10,147   10,147

Revenues

The  Partnership's income from net profits interests decreased to  $195,313
from $563,071 for the years ended December 31, 1998 and 1997, respectively,
a  decrease of 65%.  The principal factors affecting the comparison of  the
years ended December 31, 1998 and 1997 are as follows:

1.  The  average  price  for a barrel of oil received  by  the  Partnership
    decreased  during the year ended December 31, 1998 as compared  to  the
    year ended December 31, 1997 by 34%, or $6.65 per barrel, resulting  in
    a  decrease  of  approximately $327,200  in  income  from  net  profits
    interests.  Oil sales represented 86% of total oil and gas sales during
    the  year  ended December 31, 1998 as compared to 87% during  the  year
    ended December 31, 1997.

    The  average  price  for  an  mcf of gas received  by  the  Partnership
    decreased during the same period by 24%, or $.62 per mcf, resulting  in
    a  decrease  of  approximately  $35,000  in  income  from  net  profits
    interests.

    The  total  decrease in income from net profits interests  due  to  the
    change  in prices received from oil and gas production is approximately
    $362,200.  The market price for oil and gas has been extremely volatile
    over  the  past  decade  and management expects  a  certain  amount  of
    volatility to continue in the foreseeable future.

<PAGE>
2.  Oil  production decreased approximately 500 barrels or  1%  during  the
    year ended December 31, 1998 as compared to the year ended December 31,
    1997,  resulting in a decrease of approximately $6,400 in  income  from
    net profits interests.

    Gas  production decreased approximately 4,100 mcf or 7% during the same
    period, resulting in a decrease of approximately $8,000 in income  from
    net profits interests.

    The  total  decrease in income from net profits interests  due  to  the
    change in production is approximately $14,400.

3.  Lease   operating  costs  and  production  taxes  were  2%  lower,   or
    approximately $9,100 less during the year ended December  31,  1998  as
    compared to the year ended December 31, 1997.

Costs and Expenses

Total  costs and expenses increased to $596,467 from $255,828 for the years
ended  December 31, 1998 and 1997, respectively, an increase of 133%.   The
increase  is  the  result  of  higher  depletion  expense,  provision   for
impairment and general and administrative expense.

1.  General and administrative costs consists of independent accounting and
    engineering  fees,  computer services, postage,  and  Managing  General
    Partner  personnel costs.  General and administrative  costs  increased
    12% or approximately $10,000 during the year ended December 31, 1998 as
    compared to the year ended December 31, 1997.

2.    Depletion  expense increased to $249,000 for the year ended  December
   31, 1998 from $175,000 for the same period in 1997.  This represents  an
   increase of 42%.  Depletion is calculated using the units of revenue method
   of amortization based on a percentage of current period gross revenues to
   total future gross oil and gas revenues, as estimated by the Partnership's
   independent petroleum consultants.

    A  contributing factor to the increase in depletion expense between the
    comparative periods was the decrease in the price of oil and  gas  used
    to determine the Partnership's reserves for January 1, 1999 as compared
    to  1998.   Another  contributing factor  was  due  to  the  impact  of
    revisions  of  previous estimates on reserves.  Revisions  of  previous
    estimates  can be attributed to the changes in production  performance,
    oil  and  gas  price and production costs.  The impact of the  revision
    would  have  increased depletion expense approximately  $32,000  as  of
    December 31, 1997.

3.    The  Partnership reduced the net capitalized costs  of  oil  and  gas
   properties by $256,624.  This provision for impairment had the effect of
   reducing net income, but did not affect cash flow or partner distributions.
   See Summary of Significant Accounting Policies - Oil and Gas Properties.


<PAGE>

Results of Operations

B.  General Comparison of the Years Ended December 31, 1997 and 1996

The  following  table  provides certain information  regarding  performance
factors for the years ended December 31, 1997 and 1996:

                                                  Year Ended     Percentage
                                                 December 31,     Increase
                                                1997      1996   (Decrease)
                                                ----      ----   ---------
Average price per barrel of oil            $    19.51    21.12     (8%)
Average price per mcf of gas               $     2.58     2.75     (6%)
Oil production in barrels                      49,200   57,200    (14%)
Gas production in mcf                          56,400   58,700     (4%)
Income from net profits interests          $  563,071  745,147    (24%)
Partnership distributions                  $  581,000  605,540     (4%)
Limited partner distributions              $  522,900  545,540     (4%)
Per unit distribution to limited partners  $    51.53    53.76     (4%)
Number of limited partner units                10,147   10,147

Revenues

The  Partnership's income from net profits interests decreased to  $563,071
from $745,147 for the years ended December 31, 1997 and 1996, respectively,
a  decrease of 24%.  The principal factors affecting the comparison of  the
years ended December 31, 1997 and 1996 are as follows:

1.  The  average  price  for a barrel of oil received  by  the  Partnership
    decreased  during the year ended December 31, 1997 as compared  to  the
    year ended December 31, 1996 by 8%, or $1.61 per barrel, resulting in a
    decrease of approximately $92,100 in income from net profits interests.
    Oil  sales represented 87% of total oil and gas sales during  the  year
    ended  December  31,  1997 as compared to 88%  during  the  year  ended
    December 31, 1996.

    The  average  price  for  an  mcf of gas received  by  the  Partnership
    decreased during the same period by 6%, or $.17 per mcf, resulting in a
    decrease of approximately $10,000 in income from net profits interests.

    The  net total decrease in income from net profits interests due to the
    change  in prices received from oil and gas production is approximately
    $102,100.  The market price for oil and gas has been extremely volatile
    over  the  past  decade  and management expects  a  certain  amount  of
    volatility to continue in the foreseeable future.

<PAGE>

2.  Oil  production decreased approximately 8,000 barrels or 14% during the
    year ended December 31, 1997 as compared to the year ended December 31,
    1996, resulting in a decrease of approximately $156,100 in income  from
    net profits interests.

    Gas  production decreased approximately 2,300 mcf or 4% during the same
    period, resulting in a decrease of approximately $5,900 in income  from
    net profits interests.

    The  total  decrease in income from net profits interests  due  to  the
    change in production is approximately $162,000.  The decrease from 1996
    to 1997 is in part due to normal decline and mechanical problems on two
    wells.

3.  Lease  operating  costs  and  production  taxes  were  13%  lower,   or
    approximately $82,000 less during the year ended December 31,  1997  as
    compared  to the year ended December 31, 1996.  Decrease from 1996  due
    largely to significant cost in 1996 to re-equip a well.

Costs and Expenses

Total  costs and expenses increased to $255,828 from $189,502 for the years
ended  December 31, 1997 and 1996, respectively, an increase of  35%.   The
increase  is  the result of higher depletion expense, partially  offset  by
general and administrative expense.

1.  General and administrative costs consists of independent accounting and
    engineering  fees,  computer services, postage,  and  Managing  General
    Partner personnel costs.  General and administrative costs decreased 1%
    or  approximately  $700  during the year ended  December  31,  1997  as
    compared to the year ended December 31, 1996.

4.    Depletion  expense increased to $175,000 for the year ended  December
   31, 1997 from $108,000 for the same period in 1996.  This represents  an
   increase of 62%.  Depletion is calculated using the units of revenue method
   of amortization based on a percentage of current period gross revenues to
   total future gross oil and gas revenues, as estimated by the Partnership's
   independent petroleum consultants.

    A  contributing factor to the increase in depletion expense between the
    comparative periods was the decrease in the price of oil and  gas  used
    to determine the Partnership's reserves for January 1, 1998 as compared
    to  1997.   Another  contributing factor  was  due  to  the  impact  of
    revisions  of  previous estimates on reserves.  Revisions  of  previous
    estimates  can be attributed to the changes in production  performance,
    oil  and  gas  price and production costs.  The impact of the  revision
    would  have  increased depletion expense approximately  $60,000  as  of
    December 31, 1996.

<PAGE>

C.  Revenue and Distribution Comparison

Partnership net income (loss) for the years ended December 31,  1998,  1997
and  1996  was $(398,635), $319,497 and $558,108, respectively.   Excluding
the  effects  of  depreciation, depletion, amortization and  provision  for
impairment net income for the years ended December 31, 1998,1997  and  1996
would   have   been   $106,989,   $494,497  and   $666,108,   respectively.
Correspondingly, Partnership distributions for the years ended December 31,
1998,  1997  and  1996 were $240,472, $581,000 and $605,540,  respectively.
These  differences  are indicative of the changes in oil  and  gas  prices,
production and properties during 1998, 1997 and 1996.

The  sources  for  the  1998 distributions of $240,472  were  oil  and  gas
operations  of  approximately  $208,000 and  the  change  in  oil  and  gas
properties  of  approximately  $62,200,  resulting  in  excess   cash   for
contingencies  or  subsequent distributions.   The  sources  for  the  1997
distributions  of  $581,000  were oil and gas operations  of  approximately
$554,100 and the change in oil and gas properties of approximately  $1,000,
with  the  balance  from available cash on hand at  the  beginning  of  the
period.   The sources for the 1996 distributions of $605,540 were  oil  and
gas operations of approximately $595,800 and property sales of $1,000, with
the balance from available cash on hand at the beginning of the period.

Total  distributions during the year ended December 31, 1998 were  $240,472
of  which  $218,472 was distributed to the limited partners and $22,000  to
the general partners.  The per unit distribution to limited partners during
the  same  period was $21.53.  Total distributions during  the  year  ended
December  31, 1997 were $581,000 of which $522,900 was distributed  to  the
limited  partners  and  $58,100  to the general  partners.   The  per  unit
distribution to limited partners during the same period was $51.53.   Total
distributions  during  the year ended December 31, 1996  were  $605,540  of
which  $545,540 was distributed to the limited partners and $60,000 to  the
general partners.  The per unit distribution to limited partners during the
same period was $53.76.

Since  inception of the Partnership, cumulative monthly cash  distributions
of  $5,581,587  have been made to the partners.  As of December  31,  1998,
$5,043,913 or $497.08 per limited partner unit, has been distributed to the
limited partners, representing a 99% return of the capital contributed.

<PAGE>
Liquidity and Capital Resources

The  primary source of cash is from operations, the receipt of income  from
interests in oil and gas properties.  The Partnership knows of no  material
change, nor does it anticipate any such change.

Cash flows provided by operating activities were approximately $208,000  in
1998 compared to $554,100 in 1997 and approximately $595,800 in 1996.   The
primary  source  of  the  1998  cash flow  from  operating  activities  was
profitable operations.

Cash  flows provided by investing activities were $62,200 in 1998  compared
to  $1,030 in 1997 and approximately $1,000 in 1996.  The principal  source
of the 1998 cash flow from investing activities was the sale of oil and gas
properties.

Cash flows used in financing activities were approximately $240,100 in 1998
compared to $581,100 in 1997 and approximately $605,500 in 1996.  The  only
use in financing activities was the distributions to partners.

As  of  December  31,  1998, the Partnership had approximately  $54,700  in
working  capital.   The  Managing  General  Partner  knows  of  no  unusual
contractual commitments and believes the revenue generated from  operations
are adequate to meet the needs of the Partnership.

Liquidity - Managing General Partner

The  Managing General Partner has a highly leveraged capital structure with
over   $21.0  million  of  interest  payments  due  in  1999  on  its  debt
obligations.   Due  to  severely depressed commodity prices,  the  Managing
General  Partner  is experiencing difficulty in generating sufficient  cash
flow  to  meet  its obligations and sustain its operations.   The  Managing
General  Partner is currently in the process of renegotiating the terms  of
its  various obligations with its creditors and/or attempting to  seek  new
lenders  or  equity investors.  Additionally, the Managing General  Partner
would   consider  disposing  of  certain  assets  in  order  to  meet   its
obligations.

There  can  be  no  assurance  that  the Managing  General  Partner's  debt
restructuring efforts will be successful or that the lenders will agree  to
a   course   of  action  consistent  with  the  Managing  General  Partners
requirements  in restructuring the obligations.  Even if such agreement  is
reached,  it  may  require approval of additional  lenders,  which  is  not
assured.   Furthermore, there can be no assurance that the sales of  assets
can  be  successfully  accomplished on terms  acceptable  to  the  Managing
General   Partner.   Under  current  circumstances,  the  Managing  General
Partner's  ability to continue as a going concern depends upon its  ability
to  (1)  successfully  restructure  its obligations  or  obtain  additional
financing  as  may  be  required, (2) maintain  compliance  with  all  debt
covenants, (3) generate sufficient cash flow to meet its obligations  on  a
timely  basis, and (4) achieve satisfactory levels of future earnings.   If
the  Managing  General Partner is unsuccessful in its efforts,  it  may  be
unable to meet its obligations making it necessary to undertake such  other
actions as may be appropriate to preserve asset values.

Information Systems for the Year 2000

The  Managing  General Partner is continuing in its effort to identify  and
assess  its exposure to the potential Year 2000 software and imbedded  chip
processing  and  date  sensitivity issue.   Through  the  Managing  General
Partners data processing subsidiary, Midland Southwest Software, Inc.,  the
Managing   General  Partner  proactively  initiated  a  plan  to   identify
applicable hardware and software, assess impact and effect, estimate costs,
construct and implement corrective actions, and prepare contingency plans.

<PAGE>
Identification & Assessment

The  Managing  General  Partner currently believes it  has  identified  the
internal  and external software and hardware that may have date sensitivity
problems.  Four critical systems and/or functions were identified:  (1) the
proprietary software of the Partnership (OGAS) that is used for oil  &  gas
property management and financial accounting functions, (2) the DEC VAX/VMS
hardware and operating system, (3) various third-party application software
including  lease  economic  analysis, fixed  asset  management,  geological
applications, and payroll/human resource programs, and (4) External Agents.

The  proprietary  software of the Partnership is currently  in  process  of
meeting  compliance requirements with an estimated completion date of  mid-
year  1999.   Since this is an internally generated software  package,  the
Managing General Partner has estimated the cost to be approximately $25,000
by  estimating the necessary man-hours.  These modifications are being made
by internal staff and do not represent additional costs to the Partnership.
The  Managing General Partner has not made contingency plans at  this  time
since  the  conversion is ahead of schedule and being handled  by  Managing
General  Partner controlled internal programmers.  Given the complexity  of
the systems being modified, it is anticipated that some problems may arise,
but  with  an expected early completion date, the Managing General  Partner
feels that adequate time is available to overcome unforeseen delays.

DEC has released a fully compliant version of its operating system that  is
used  by  the  Partnership on the DEC VAX system.  It will be installed  in
August 1999, the Managing General Partner believes that this will solve any
potential problems on the system.

The  Managing  General Partner has identified various third-party  software
that may have date sensitivity problems and is working with the vendors  to
secure  solutions as well as prepare contingency plans.  After  review  and
evaluation  of  the vendor plans and status, the Managing  General  Partner
believes that the problems will be resolved prior to the year 2000  or  the
alternate  contingency plan will sufficiently and adequately remediate  the
problem so that there is no material disruption to business functions.

<PAGE>
The  External  Agents  of  the  Partnership include  suppliers,  customers,
owners,  vendors, banks, product purchasers including pipelines, and  other
oil  and  gas property operators.  The Managing General Partner is  in  the
process of identifying and communicating with each critical External  Agent
about  its  plan  and progress thereof in addressing the Year  2000  issue.
This process is on schedule and the Managing General Partner, at this time,
believes  that  there  should  be no material  interference  or  disruption
associated with any of the critical External Agent's functions necessary to
the   Partnership's  business.   The  Managing  General  Partner  estimates
completion of this audit by mid-year 1999 and believes that alternate plans
can  be  devised to circumvent any material problems arising from  critical
External Agent noncompliance.

Cost

To  date,  the Managing General Partner has incurred only minimal  internal
man-hour costs for identification, planning, and maintenance.  The Managing
General  Partner believes that the necessary additional costs will also  be
minimal  and most will fall under normal and general maintenance procedures
and updates.  An accurate cost cannot be determined at this time, but it is
expected  that  the total cost to remediate all systems  to  be  less  than
$50,000.

<PAGE>
Risks/Contingency

The  failure to correct critical systems of the Partnership, or the failure
of  a  material business partner or External Agent to resolve critical Year
2000  issues  could  have a serious adverse impact on the  ability  of  the
Partnership  to  continue operations and meet obligations.   Based  on  the
Managing  General  Partner's  evaluation and  assessment  to  date,  it  is
believed  that any interruption in operation will be minor and  short-lived
and  pose no material monetary loss, safety, or environmental risk  to  the
Partnership.   However, until all assessment is complete, it is  impossible
to accurately identify the risks, quantify potential impacts or establish a
final  contingency  plan. The Managing General Partner  believes  that  its
assessment and contingency planning will be complete no later than mid-year
1999.

Worst Case Scenario

The  Securities and Exchange Commission requires that public companies must
forecast the most reasonably likely worst case Year 2000 scenario, assuming
that  the  Managing  General Partner's Year 2000  plan  is  not  effective.
Analysis  of the most reasonably likely worst case Year 2000 scenarios  the
Partnership  may face leads to contemplation of the following possibilities
which,  though  considered  highly  unlikely,  must  be  included  in   any
consideration  of worst cases: widespread failure of electrical,  gas,  and
similar   supplies   by  utilities  serving  the  Partnership;   widespread
disruption  of  the  services of communications  common  carriers;  similar
disruption to means and modes of transportation for the Partnership and its
employees, contractors, suppliers, and customers; significant disruption to
the  Partnership's  ability to gain access to,  and  continue  working  in,
office  buildings  and other facilities; and the failure, of  third-parties
systems,  the  effects  of which would have a cumulative  material  adverse
impact  on  the  Partnership's  critical systems.   The  Partnership  could
experience  an inability by customers, traders, and others  to  pay,  on  a
timely  basis or at all, obligations owed to the Partnership.  Under  these
circumstances, the adverse effect on the Partnership, and the diminution of
Partnership revenues, could be material, although not quantifiable at  this
time.

<PAGE>
Item 8.   Financial Statements and Supplementary Data

                      Index to Financial Statements

                                                                       Page

Independent Auditors Reports                                            22

Balance Sheets                                                          24

Statements of Operations                                                25

Statement of Changes in Partners' Equity                                26

Statements of Cash Flows                                                27

Notes to Financial Statements                                           29

<PAGE>









                        INDEPENDENT AUDITORS REPORT
                                     
The Partners
Southwest Royalties Institutional
 Income Fund VIII-B, L.P.
 (A Delaware Limited Partnership)


We  have  audited  the  accompanying balance sheets of Southwest  Royalties
Institutional Income Fund VIII-B, L.P. (the "Partnership") as  of  December
31,  1998  and 1997, and the related statements of operations,  changes  in
partners'  equity and cash flows for the years then ended.  These financial
statements  are  the responsibility of the Partnership's  management.   Our
responsibility is to express an opinion on these financial statements based
on our audits.

We  conducted  our  audits in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free
of  material  misstatement.  An audit includes examining, on a test  basis,
evidence   supporting  the  amounts  and  disclosures  in   the   financial
statements.   An  audit  also includes assessing the accounting  principles
used  and  significant estimates made by management, as well as  evaluating
the  overall financial statement presentation.  We believe that our  audits
provide a reasonable basis for our opinion.

In  our opinion, the financial statements referred to above present fairly,
in  all  material  respects, the financial position of Southwest  Royalties
Institutional Income Fund VIII-B, L.P. as of December 31, 1998 and 1997 and
the  results of its operations and its cash flows for the years then  ended
in conformity with generally accepted accounting principles.



                        KPMG LLP



Midland, Texas
March 18, 1999

<PAGE>










                    REPORT OF INDEPENDENT ACCOUNTANTS


To the Partners
Southwest Royalties Institutional
 Income Fund VIII-B, L.P.
Midland, Texas

We  have  audited  the  accompanying statements of operations,  changes  in
partners' equity and cash flows of Southwest Royalties Institutional Income
Fund  VIII-B,  L.P. for the year ended December 31, 1996.  These  financial
statements  are  the responsibility of the partnership's  management.   Our
responsibility is to express an opinion on these financial statements based
on our audit.

We  conducted  our  audit  in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the  audit  to
obtain  reasonable  assurance about whether the statements  of  operations,
changes   in   partners  equity  and  cash  flows  are  free  of   material
misstatement.   An  audit  includes examining, on a  test  basis,  evidence
supporting  the  amounts and disclosures in the statements  of  operations,
changes  in  partners  equity  and cash  flows.   An  audit  also  includes
assessing the accounting principles used and significant estimates made  by
management,  as  well  as  evaluating  the  overall  presentation  of   the
statements  of operations, changes in partners equity and cash  flows.   We
believe that our audit of the statements of operations, changes in partners
equity and cash flows provides a reasonable basis for our opinion.

In  our  opinion, the statements of operations, changes in partners  equity
and  cash flows referred to above present fairly, in all material respects,
the   results   of  operations  and  cash  flows  of  Southwest   Royalties
Institutional  Income  Fund VIII-B, L.P. for the year  ended  December  31,
1996, in conformity with generally accepted accounting principles.


                        JOSEPH DECOSIMO AND COMPANY
                            A   Tennessee   Registered  Limited   Liability
Partnership


Chattanooga, Tennessee
March 14, 1997

<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                              Balance Sheets
                        December 31, 1998 and 1997


                                                      1998          1997
                                                      ----          ----
  Assets

Current assets:
 Cash and cash equivalents                   $        33,562        3,347
 Receivable from Managing General Partner             21,626      122,681
 Other receivable                                          -       47,829

---------                                    ---------
                                                 Total    current    assets
55,188                                       173,857

---------                                    ---------
Oil and gas properties - using the full-
 cost method of accounting                         4,133,496    4,147,890
  Less accumulated depreciation,
                                               depletion  and  amortization
3,608,058                                    3,102,434

---------                                    ---------
                                              Net  oil  and gas  properties
525,438                                      1,045,456

---------                                    ---------
                                                                          $
580,626                                      1,219,313

=========                                    =========

  Liabilities and Partners' Equity

Current liability - Distributions payable    $           532          112

---------                                    ---------
Partners' equity:
 General partners                                      (208)       11,093
 Limited partners                                    580,302    1,208,108

---------                                    ---------
                                                Total    partners'   equity
580,094                                      1,219,201

---------                                    ---------
                                                                          $
580,626                                      1,219,313

=========                                    =========




















                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                         Statements of Operations
               Years ended December 31, 1998, 1997 and 1996


                                                 1998      1997      1996
                                                 ----      ----      ----
  Revenues

Income from net profits interests         $    195,313   563,071  745,147
Interest                                         2,349    12,254    2,463
Miscellaneous                                      170         -        -
                                                                    -------
-------                                   -------
                                                                    197,832
575,325                                   747,610
                                                                    -------
-------                                   -------

  Expenses

General and administrative                      90,843    80,828   81,502
Depreciation, depletion and amortization       249,000   175,000  108,000
Provision for impairment of oil and gas
 properties                                    256,624         -        -
                                                                    -------
-------                                   -------
                                                                    596,467
255,828                                   189,502
                                                                    -------
-------                                   -------
Net income (loss)                         $  (398,635)   319,497  558,108
                                                                    =======
=======                                   =======
Net income (loss) allocated to:

 Managing General Partner                 $      9,629    44,505   59,950
                                                                    =======
=======                                   =======
 General partner                          $      1,070     4,945    6,661
                                                                    =======
=======                                   =======
 Limited partners                         $  (409,334)   270,047  491,497
                                                                    =======
=======                                   =======
  Per limited partner unit                $     (40.34)    26.61    48.44
                                                                    =======
=======                                   =======























                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                 Statement of Changes in Partners' Equity
               Years ended December 31, 1998, 1997 and 1996


                                              General   Limited
                                              Partners  Partners   Total
                                              --------  --------   -----
Balance at December 31, 1995            $     13,132  1,515,004 1,528,136

 Net income                                   66,611    491,497   558,108

 Distributions                              (60,000)  (545,540) (605,540)
                                                                    -------
---------                               ---------
Balance at December 31, 1996                  19,743  1,460,961 1,480,704

 Net income                                   49,450    270,047   319,497

 Distributions                              (58,100)  (522,900) (581,000)
                                                                    -------
---------                               ---------
Balance at December 31, 1997                  11,093  1,208,108 1,219,201

 Net income (loss)                            10,699  (409,334) (398,635)

 Distributions                              (22,000)  (218,472) (240,472)
                                                                    -------
---------                               ---------
Balance at December 31, 1998            $      (208)    580,302   580,094
                                                                    =======
=========                               =========































                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                         Statements of Cash Flows
               Years ended December 31, 1998, 1997 and 1996

                                                 1998      1997      1996
                                                 ----      ----      ----
Cash flows from operating activities:

 Cash received from net profits interests $    289,468   622,633  674,740
 Cash paid to Managing General Partner
  for administrative fees and general
                                            and   administrative   overhead
(83,773)                                  (80,828)(81,434)
 Interest received                               2,349    12,254    2,463
                                                                   --------
--------                                  --------
   Net  cash provided by operating activities              208,044  554,059
595,769
                                                                   --------
--------                                  --------
Cash flows provided by investing activities:

 Cash received from sale of oil and gas
  properties                                    62,224     1,030    1,000
                                                                   --------
--------                                  --------
Cash flows used in financing activities:

 Distributions to partners                   (240,053) (581,059)(605,524)
                                                                   --------
--------                                  --------
Net increase (decrease) in cash and
 cash equivalents                               30,215  (25,970)  (8,755)

 Beginning of year                               3,347    29,317   38,072
                                                                   --------
--------                                  --------
 End of year                              $     33,562     3,347   29,317
                                                                   ========
========                                  ========


(continued)























                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                   Statements of Cash Flows, continued
               Years ended December 31, 1998, 1997 and 1996


                                                  1998     1997      1996
                                                  ----     ----      ----

Reconciliation of net income (loss) to net
 cash provided by operating activities:

Net income (loss)                         $  (398,635)   319,497  558,108

Adjustments to reconcile net income (loss) to
 net cash provided by operating activities:

   Depreciation, depletion and amortization               249,000   175,000
108,000
  Provision for impairment of oil and gas
                                           properties     256,624         -
-
  (Increase) decrease in receivables            93,985    59,562 (70,339)
  Decrease in payables                           7,070         -        -
                                                                    -------
-------                                   -------
Net cash provided by operating activities $    208,044   554,059  595,769
                                                                    =======
=======                                   =======

Supplemental schedule of noncash
 investing and financing activities:

 Sale of oil and gas properties included in
   receivable from Managing General Partner           $         -    47,829
-






























                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


1.   Organization
     Southwest  Royalties  Institutional  Income  Fund  VIII-B,  L.P.   was
     organized  under  the laws of the state of Delaware  on  November  30,
     1987,  for  the purpose of acquiring producing oil and gas  properties
     and to produce and market crude oil and natural gas produced from such
     properties  for a term of 50 years, unless terminated  at  an  earlier
     date  as  provided for in the Partnership Agreement.  The offering  of
     limited   partner   units  began  March  31,  1988,  minimum   capital
     requirements  were met July 11, 1988, with the offering  concluded  on
     March 31, 1989.

     The  Partnership  sells its oil and gas production  to  a  variety  of
     purchasers  with the prices it receives being dependent upon  the  oil
     and  gas  economy.  Southwest Royalties, Inc. serves as  the  Managing
     General  Partner  and  H. H. Wommack, III, as the  individual  general
     partner.  Revenues, costs and expenses are allocated as follows:

                                                     Limited      General
                                                     Partners     Partners
                                                     --------     --------
     Interest income on capital contributions       100%             -
     Oil and gas sales from net profits interests    90%            10%
     All other revenues                              90%            10%
     Organization and offering costs (1)            100%             -
     Amortization of organization costs             100%             -
     Property acquisition costs                     100%             -
     Gain/loss on property dispositions              90%            10%
     Operating and administrative costs (2)          90%            10%
     Depreciation, depletion and amortization
      of oil and gas properties                     100%             -
     All other costs                                 90%            10%

          (1)   All  organization costs in excess of 3% of initial  capital
          contributions  will be paid by the Managing General  Partner  and
          will  be treated as a capital contribution.  The Partnership paid
          the  Managing  General Partner an amount equal to 3%  of  initial
          capital contributions for such organization costs.

          (2)   Administrative costs in any year which exceed 2% of capital
          contributions shall be paid by the Managing Partner and  will  be
          treated as a capital contribution.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


2.   Summary of Significant Accounting Policies

     Oil and Gas Properties
     Oil  and  gas properties are accounted for at cost under the full-cost
     method.   Under  this  method, all productive and nonproductive  costs
     incurred   in   connection  with  the  acquisition,  exploration   and
     development of oil and gas reserves are capitalized.  Gain or loss  on
     the   sale  of  oil  and  gas  properties  is  not  recognized  unless
     significant oil and gas reserves are involved.

     The  Partnership's policy for depreciation, depletion and amortization
     of  oil  and  gas  properties is computed under the units  of  revenue
     method.   Under  the units of revenue method, depreciation,  depletion
     and  amortization is computed on the basis of current  gross  revenues
     from production in relation to future gross revenues, based on current
     prices, from estimated production of proved oil and gas reserves.

     Under  the  units  of  revenue method, the  Partnership  computes  the
     provision  by multiplying the total unamortized cost of  oil  and  gas
     properties by an overall rate determined by dividing (a) oil  and  gas
     revenues during the period by (b) the total future gross oil  and  gas
     revenues  as  estimated  by  the Partnership's  independent  petroleum
     consultants.   It  is  reasonably possible  that  those  estimates  of
     anticipated  future  gross revenues, the remaining estimated  economic
     life  of  the product, or both could be changed significantly  in  the
     near  term  due to the potential fluctuation of oil and gas prices  or
     production.   The  depletion estimate would also be affected  by  this
     change.

     Should the net capitalized costs exceed the estimated present value of
     oil  and  gas reserves, discounted at 10%, such excess costs would  be
     charged  to current expense.  As of December 31, 1998, net capitalized
     cost  exceeded  the estimated present value of oil and  gas  reserves,
     thus  an  adjustment of $256,624 was made to the financial  statement.
     As  of  December 31, 1997 and 1996 the net capitalized costs  did  not
     exceed the estimated present value of oil and gas reserves.

     The  Partnership's interest in oil and gas properties consists of  net
     profits  interests in proved properties located within the continental
     United States.  A net profits interest is created when the owner of  a
     working  interest  in a property enters into an arrangement  providing
     that  the  net profits interest owner will receive a stated percentage
     of  the net profit from the property.  The net profits interest  owner
     will not otherwise participate in additional costs and expenses of the
     property.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


2.   Summary of Significant Accounting Policies - continued

     Estimates and Uncertainties
     The  preparation of financial statements in conformity with  generally
     accepted  accounting principles requires management to make  estimates
     and  assumptions  that  affect  the reported  amounts  of  assets  and
     liabilities and disclosure of contingent assets and liabilities at the
     date  of the financial statements and the reported amounts of revenues
     and expenses during the reporting period.  Actual results could differ
     from those estimates.

     Syndication Costs
     Syndication  costs  are  accounted for as a reduction  of  partnership
     equity.

     Environmental Costs
     The  Partnership  is  subject to extensive federal,  state  and  local
     environmental laws and regulations.  These laws, which are  constantly
     changing, regulate the discharge of materials into the environment and
     may  require  the Partnership to remove or mitigate the  environmental
     effects of the disposal or release of petroleum or chemical substances
     at   various  sites.   Environmental  expenditures  are  expensed   or
     capitalized depending on their future economic benefit.

     Costs  which improve a property as compared with the condition of  the
     property  when  originally  constructed or acquired  and  costs  which
     prevent    future   environmental   contamination   are   capitalized.
     Expenditures  that  relate  to an existing condition  caused  by  past
     operations  and  that have no future economic benefits  are  expensed.
     Liabilities for expenditures of a non-capital nature are recorded when
     environmental assessment and/or remediation is probable, and the costs
     can be reasonably estimated.

     Gas Balancing
     The  Partnership  utilizes the sales method  of  accounting  for  gas-
     balancing  arrangements.  Under this method the Partnership recognizes
     sales  revenue  on all gas sold.  As of December 31,  1998,  1997  and
     1996, there were no significant amounts of imbalance in terms of units
     and value.


<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


2.   Summary of Significant Accounting Policies - continued

     Cash and Cash Equivalents
     For purposes of the statement of cash flows, the Partnership considers
     all  highly liquid debt instruments purchased with a maturity of three
     months or less to be cash equivalents.  The Partnership maintains  its
     cash at one financial institution.

     Income Taxes
     No  provision  for  income  taxes  is  reflected  in  these  financial
     statements, since the tax effects of the Partnership's income or  loss
     are passed through to the individual partners.

     In   accordance  with  the  requirements  of  Statement  of  Financial
     Accounting  Standards  No. 109, "Accounting  for  Income  Taxes",  the
     Partnership's tax basis in its oil and gas properties at December  31,
     1998  and 1997 is $512,811 and $212,510, more respectively, than  that
     shown  on the accompanying Balance Sheets in accordance with generally
     accepted accounting principles.

     Number of Limited Partner Units
     As  of  December  31, 1998, 1997 and 1996, there were  10,147  limited
     partner units outstanding held by 601, 615 and 631 partners.

     Concentrations of Credit Risk
     The  Partnership is subject to credit risk through trade  receivables.
     Although  a  substantial portion of its debtors'  ability  to  pay  is
     dependent upon the oil and gas industry, credit risk is minimized  due
     to  a  large customer base.  All partnership revenues are received  by
     the   Managing  General  Partner  and  subsequently  remitted  to  the
     partnership and all expenses are paid by the Managing General  Partner
     and subsequently reimbursed by the partnership.

     Fair Value of Financial Instruments
     The  carrying amount of cash and accounts receivable approximates fair
     value due to the short maturity of these instruments.

     Net Income (loss) per limited partnership unit
     The  net  income (loss) per limited partnership unit is calculated  by
     using the number of outstanding limited partnership units.




<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


3.   Liquidity - Managing General Partner
     The  Managing General Partner has a highly leveraged capital structure
     with  over $21.0 million of interest payments due in 1999 on its  debt
     obligations.  Due to severely depressed commodity prices, the Managing
     General  Partner  is experiencing difficulty in generating  sufficient
     cash  flow  to  meet its obligations and sustain its operations.   The
     Managing  General Partner is currently in the process of renegotiating
     the  terms  of  its  various  obligations with  its  creditors  and/or
     attempting to seek new lenders or equity investors.  Additionally, the
     Managing General Partner would consider disposing of certain assets in
     order to meet its obligations.
     
     There  can  be  no assurance that the Managing General Partner's  debt
     restructuring  efforts  will be successful or that  the  lenders  will
     agree  to  a  course  of action consistent with the  Managing  General
     Partners requirements in restructuring the obligations.  Even if  such
     agreement  is reached, it may require approval of additional  lenders,
     which is not assured.  Furthermore, there can be no assurance that the
     sales  of  assets can be successfully accomplished on terms acceptable
     to  the  Managing  General Partner.  Under current circumstances,  the
     Managing  General  Partner's ability to continue as  a  going  concern
     depends   upon  its  ability  to  (1)  successfully  restructure   its
     obligations  or  obtain additional financing as may be  required,  (2)
     maintain  compliance with all debt covenants, (3) generate  sufficient
     cash  flow to meet its obligations on a timely basis, and (4)  achieve
     satisfactory  levels  of  future earnings.  If  the  Managing  General
     Partner  is unsuccessful in its efforts, it may be unable to meet  its
     obligations making it necessary to undertake such other actions as may
     be appropriate to preserve asset values.
     
4.   Commitments and Contingent Liabilities
     After  completion  of  the Partnership's first  full  fiscal  year  of
     operations and each year thereafter, the Managing General Partner  has
     offered  and will continue to offer to purchase each limited partner's
     interest  in the Partnership, at a price based on tangible  assets  of
     the Partnership, plus the present value of the future net revenues  of
     proved  oil  and gas properties, minus liabilities with a risk  factor
     discount  of  up  to one-third which may be implemented  in  the  sole
     discretion  of  the Managing General Partner.  However,  the  Managing
     General  Partner's  obligation to purchase limited  partner  units  is
     limited  to  an expenditure of an amount not in excess of 10%  of  the
     total  limited  partner  units initially  subscribed  for  by  limited
     partners.

     The  Partnership  is  subject  to various  federal,  state  and  local
     environmental  laws  and  regulations which  establish  standards  and
     requirements  for  protection  of the  environment.   The  Partnership
     cannot  predict the future impact of such standards and  requirements,
     which  are  subject to change and can have retroactive  effectiveness.
     The  Partnership  continues to monitor the status of  these  laws  and
     regulations.

     As  of December 31, 1998, the Partnership has not been fined, cited or
     notified  of any environmental violations and management is not  aware
     of  any  unasserted  violations which would have  a  material  adverse
     effect upon capital expenditures, earnings or the competitive position
     in the oil and gas industry.

     However,  the  Managing  General Partner does recognize  by  the  very
     nature  of its business, material costs could be incurred in the  near
     term  to  bring the Partnership into total compliance.  The amount  of
     such  future expenditures is not reliably determinable due to  several
     factors,  including the unknown magnitude of possible  contaminations,
     the  unknown timing and extent of the corrective actions which may  be
     required,   the  determination  of  the  Partnership's  liability   in
     proportion  to other responsible parties and the extent to which  such
     expenditures  are recoverable from insurance or indemnifications  from
     prior owners of Partnership's properties.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


5.   Related Party Transactions
     A  significant  portion  of the oil and gas properties  in  which  the
     Partnership  has  an interest are operated by and purchased  from  the
     Managing General Partner.  As is usual in the industry and as provided
     for  in  the  operating  agreement for each  respective  oil  and  gas
     property  in  which the Partnership has an interest, the  operator  is
     paid  an  amount for administrative overhead attributable to operating
     such  properties,  with such amounts to Southwest Royalties,  Inc.  as
     operator  approximating $102,200, $97,000 and $94,000  for  the  years
     ended  December 31, 1998, 1997 and 1996, respectively.   In  addition,
     the  Managing  General Partner and certain officers and employees  may
     have  an interest in some of the properties that the Partnership  also
     participates.

     Certain  subsidiaries  or affiliates of the Managing  General  Partner
     perform  various  oilfield  services  for  properties  in  which   the
     Partnership  owns an interest.  Such services aggregated approximately
     $2,600,  $2,600  and  $14,000 for the years ended December  31,  1998,
     1997,  and  1996,  respectively,  and  the  Managing  General  Partner
     believes  that these costs are comparable to similar charges  paid  by
     the Partnership to unrelated third parties.

     Southwest  Royalties,  Inc., the Managing General  Partner,  was  paid
     $72,000  during  1998,  1997 and 1996, as an  administrative  fee  for
     reimbursement   of   indirect  general  and  administrative   overhead
     expenses.

     Receivables  from  Southwest  Royalties, Inc.,  the  Managing  General
     Partner,  of approximately $21,620 and $122,680 are from oil  and  gas
     production, net of lease operating costs and production taxes,  as  of
     December 31, 1998 and 1997, respectively.

     In addition, a director and officer of the Managing General Partner is
     a  partner  in a law firm, with such firm providing legal services  to
     the  Partnership.  There were no legal services provided for the  year
     ended December 31, 1998, 1997 and approximately $70 for the year ended
     December 31, 1996.

6.   Major Customers
     No  material portion of the Partnership's business is dependent  on  a
     single  purchaser, or a very few purchasers, where  the  loss  of  one
     would  have  a  material  adverse  impact  on  the  Partnership.   Two
     purchasers  accounted for 74% of the Partnership's total oil  and  gas
     production  during  1998:  Scurlock Permian  LLC  for  50%  and  Mobil
     Corporation  for  24%.   Two  purchasers  accounted  for  73%  of  the
     Partnership's  total  oil and gas production  during  1997:   Scurlock
     Permian  Corporation  50%, and Mobil Corporation  23%.  Two purchasers
     accounted  for  77% of the Partnership's total oil and gas  production
     during  1996:  Scurlock Permian Corporation 52% and Mobil  Corporation
     25%.   All purchasers of the Partnership's oil and gas production  are
     unrelated third parties.  In the event any of these purchasers were to
     discontinue  purchasing  the Partnership's  production,  the  Managing
     General  Partner  believes that a substitute purchaser  or  purchasers
     could  be  located without undue delay.  No other purchaser  accounted
     for  an amount equal to or greater than 10% of the Partnership's sales
     of oil and gas production.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


7.   Estimated Oil and Gas Reserves (unaudited)
     The  Partnership's  interest in proved oil  and  gas  reserves  is  as
     follows:

                                                    Oil (bbls)   Gas (mcf)
                                                    ----------   ---------
     Proved developed and undeveloped reserves -

     January 1, 1996                                587,000       665,000

       Revisions of previous estimates              152,000        20,000
       Production                                  (57,000)      (59,000)
                                                    -------       -------
     December 31, 1996                              682,000       626,000

       Revisions of previous estimates            (269,000)     (209,000)
       Production                                  (49,000)      (56,000)
       Sale of oil and gas properties               (2,000)       (6,000)
                                                    -------       -------
     December 31, 1997                              362,000       355,000

       Revisions of previous estimates            (113,000)     (144,000)
       Production                                  (49,000)      (52,000)
       Sale of oil and gas properties               (1,000)      (12,000)
                                                    -------       -------
     December 31, 1998                              199,000       147,000
                                                    =======       =======

     Proved developed reserves -

     December 31, 1996                              644,000       608,000
                                                    =======       =======
     December 31, 1997                              331,000       349,000
                                                    =======       =======
     December 31, 1998                              193,000       147,000
                                                    =======       =======

     All  of  the Partnership's reserves are located within the continental
     United States.

     *Ryder  Scott  Company Petroleum Engineers prepared  the  reserve  and
     present  value data for 96.4% of the Partnership's existing properties
     as  of  January  1,  1999.   Another  independent  petroleum  engineer
     prepared  the  remaining  3.6% of the Partnership's  properties.   The
     reserve  estimates were made in accordance with guidelines established
     by  the Securities and Exchange Commission pursuant to Rule 4-10(a) of
     Regulation  S-X.  Such guidelines require oil and gas reserve  reports
     be  prepared under existing economic and operating conditions with  no
     provisions  for  price  and  cost  escalation  except  by  contractual
     arrangements.

     The  New York Mercantile Exchange price at December 31, 1998 of $12.05
     was  used  as  the  beginning basis for  the  oil  price.   Oil  price
     adjustments  from  $12.05  per  barrel were  made  in  the  individual
     evaluations  to  reflect  oil  quality, gathering  and  transportation
     costs.   The  results are an average price received at  the  lease  of
     $10.11  per  barrel  in the preparation of the reserve  report  as  of
     January 1, 1999.
     
     
<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


7.   Estimated Oil & Gas Reserves (unaudited) - continued
     In  the  determination  of  the gas price,  the  New  York  Mercantile
     Exchange price at December 31, 1998 of $1.95 was used as the beginning
     basis.   Gas  price adjustments from $1.95 per Mcf were  made  in  the
     individual   evaluations  to  reflect  BTU  content,   gathering   and
     transportation  costs and gas processing and shrinkage.   The  results
     are  an  average price received at the lease of $1.86 per Mcf  in  the
     preparation of the reserve report as of January 1, 1999.

     The  evaluation of oil and gas properties is not an exact science  and
     inevitably  involves a significant degree of uncertainty, particularly
     with respect to the quantity of oil or gas that any given property  is
     capable of producing.  Estimates of oil and gas reserves are based  on
     available  geological and engineering data, the extent and quality  of
     which may vary in each case and, in certain instances, may prove to be
     inaccurate.   Consequently, properties may be  depleted  more  rapidly
     than the geological and engineering data have indicated.

     Unanticipated  depletion, if it occurs, will result in lower  reserves
     than  previously estimated; thus an ultimately lower  return  for  the
     Partnership.  Basic changes in past reserve estimates occur  annually.
     As  new data is gathered during the subsequent year, the engineer must
     revise  his  earlier estimates.  A year of new information,  which  is
     pertinent  to  the  estimation  of  future  recoverable  volumes,   is
     available during the subsequent year evaluation.  In applying industry
     standards  and  procedures,  the  new  data  may  cause  the  previous
     estimates  to be revised.  This revision may increase or decrease  the
     earlier estimated volumes.  Pertinent information gathered during  the
     year  may include actual production and decline rates, production from
     offset  wells  drilled  to the same geologic formation,  increased  or
     decreased  water production, workovers, and changes in lifting  costs,
     among others.  Accordingly, reserve estimates are often different from
     the quantities of oil and gas that are ultimately recovered.

     The  Partnership has reserves which are classified as proved developed
     producing, proved developed non-producing and proved undeveloped.  All
     of  the proved reserves are included in the engineering reports  which
     evaluate the Partnership's present reserves.

     Because  the  Partnership does not engage in drilling activities,  the
     development  of proved undeveloped reserves is conducted  pursuant  to
     farm-out  arrangements with the Managing General Partner or  unrelated
     third  parties.  Generally, the Partnership retains a carried interest
     such  as an overriding royalty interest under the terms of a farm-out,
     or receives cash.


<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


7.   Estimated Oil & Gas Reserves (unaudited) - continued
     The  standardized measure of discounted future net cash flows relating
     to  proved oil and gas reserves at December 31, 1998, 1997 and 1996 is
     presented below:

                                              1998       1997        1996
                                              ----       ----        ----

     Future cash inflows, net of
                                        production and development
      costs                             $    900,000  2,916,000  9,830,000
     10% annual discount for
                                        estimated timing of cash
      flows                                  375,000  1,189,000  4,205,000
                                           ---------  ---------  ---------
     Standardized measure of
                                        discounted future net cash
      flows                             $    525,000  1,727,000  5,625,000
                                           =========  =========  =========

     The  principal  sources  of  change in  the  standardized  measure  of
     discounted  future  net cash flows for the years  ended  December  31,
     1998, 1997 and 1996 are as follows:

                                              1998       1997        1996
                                              ----       ----        ----

     Sales of oil and gas produced,
       net of production costs          $  (195,000)  (563,000)(1,009,000)
      Changes in prices and production costs           (745,000)(2,440,000)
2,439,000
     Changes of production rates
       (timing) and others                 (106,000)  (194,000)   (10,000)
     Sales of minerals in place              (8,000)   (18,000)          -
     Revisions of previous
        quantities estimates                (321,000)(1,246,000)    344,000
Accretion of discount                        173,000    563,000    484,000
     Discounted future net
       cash flows -
      Beginning of year                    1,727,000  5,625,000  3,377,000
                                          ----------  ---------  ---------
      End of year                       $    525,000  1,727,000  5,625,000
                                          ==========  =========  =========

     Future  net cash flows were computed using year-end prices  and  costs
     that  related  to existing proved oil and gas reserves  in  which  the
     Partnership has mineral interests.

<PAGE>
Item 9.   Changes  in and Disagreements With Accountants on Accounting  and
          Financial Disclosure

      On  June 9, 1997 Southwest Royalties, Inc. the Partnership's Managing
General  Partner (Southwest Royalties, Inc.) dismissed Joseph Decosimo  and
Company as the Partnership's independent accountants.  The Managing General
Partner's   Board  of  Directors  approved  the  decision  to  change   the
Partnership's independent accountants.

The  report of Joseph Decosimo and Company on the financial statements  for
the  fiscal  year ended December 31, 1996 contained no adverse  opinion  or
disclaimer  of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principle.

In  connection with its audit for the fiscal year ended December  31,  1996
and  through  June  9, 1997, there have been no disagreements  with  Joseph
Decosimo  and Company on any matter of accounting principles or  practices,
financial  statements  disclosure, or auditing scope  or  procedure,  which
disagreements  if not resolved to the satisfaction of Joseph  Decosimo  and
Company would have caused them to make reference thereto in their report on
the financial statements for such year.

The  Registrant has requested that Joseph Decosimo and Company  furnish  it
with  a  letter addressed to the SEC stating whether or not is agrees  with
the  above statements.  A copy of that letter is included as Exhibit 16 and
has been filed with the Securities and Exchange Commission.




<PAGE>
                                 Part III

Item 10.  Directors and Executive Officers of the Registrant

Management of the Partnership is provided by Southwest Royalties, Inc.,  as
Managing  General Partner.  The names, ages, offices, positions and  length
of  service of the directors and executive officers of Southwest Royalties,
Inc. are set forth below.  Each director and executive officer serves for a
term  of  one year.  The present directors of the Managing General  Partner
have served in their capacity since the Company's formation in 1983.

      Name                  Age                      Position
--------------------        ---         -----------------------------------
-------
H. H. Wommack, III                      43     Chairman   of   the   Board,
                                        President,
                                        Chief Executive Officer, Treasurer
                                        and Director

H. Allen Corey              42          Secretary and Director

Bill E. Coggin                          44     Vice  President  and   Chief
                                        Financial Officer

Jon P. Tate                             41     Vice  President,  Land   and
                                        Assistant Secretary

R. Douglas Keathley         43          Vice President, Operations

J. Steven Person            40          Vice President, Marketing

Paul L. Morris              57          Director

H.  H.  Wommack, III, is Chairman of the Board, President, Chief  Executive
Officer,  Treasurer, principal stockholder and a director of  the  Managing
General  Partner,  and  has  served as its President  since  the  Company's
organization  in August, 1983.  Prior to the formation of the Company,  Mr.
Wommack  was  a  self-employed  independent oil  producer  engaged  in  the
purchase  and sale of royalty and working interests in oil and gas  leases,
and  the drilling of exploratory and developmental oil and gas wells.   Mr.
Wommack  holds  a J.D. degree from the University of Texas  from  which  he
graduated  in  1980, and a B.A. from the University of  North  Carolina  in
1977.

H.  Allen  Corey, a founder of the Managing General Partner, has served  as
the   Managing  General  Partner's  secretary  and  a  director  since  its
inception.   Mr. Corey is President of Trolley Barn Brewery, Inc.,  a  brew
pub restaurant chain based in the Southeast.  Prior to his involvement with
Trolley Barn, Mr. Corey was a partner at the law firm of Miller & Martin in
Chattanooga,  Tennessee.  He is currently of counsel to  the  law  firm  of
Baker,  Donelson,  Bearman  & Caldwell, with the  offices  in  Chattanooga,
Tennessee.  Mr. Corey received a J.D. degree from the Vanderbilt University
Law  School and B.A. degree from the University of North Carolina at Chapel
Hill.

<PAGE>
Bill  E. Coggin, Vice President and Chief Financial Officer, has been  with
the Managing General Partner since 1985.  Mr. Coggin was Controller for Rod
Ric  Corporation of Midland, Texas, an oil and gas drilling company, during
the latter part of 1984.  He was Controller for C.F. Lawrence & Associates,
Inc., an independent oil and gas operator also of Midland, Texas during the
early  part of 1984.  Mr. Coggin taught public school for four years  prior
to his business experience.  Mr. Coggin received a  B.S. in Education and a
B.B.A. in Accounting from Angelo State University.

Jon  P.  Tate,  Vice President, Land and Assistant Secretary,  assumed  his
responsibilities  with  the Managing General Partner  in  1989.   Prior  to
joining  the  Managing  General Partner, Mr.  Tate  was  employed  by  C.F.
Lawrence  & Associates, Inc., an independent oil and gas company,  as  Land
Manager from 1981 through 1989.  Mr. Tate is a member of the Permian  Basin
Landman's  Association and received his B.B.S. degree  from  Hardin-Simmons
University.

R.    Douglas   Keathley,   Vice   President,   Operations,   assumed   his
responsibilities with the Managing General Partner as a Production Engineer
in  October,  1992.   Prior to joining the Managing  General  Partner,  Mr.
Keathley  was  employed for four (4) years by ARCO Oil  &  Gas  Company  as
senior  drilling  engineer working in all phases of well production  (1988-
1992),  eight  (8)  years by Reading & Bates Petroleum  Company  as  senior
petroleum  engineer responsible for drilling (1980-1988) and two (2)  years
by  Tenneco Oil Company as drilling engineer responsible for all phases  of
drilling   (1978-1980).   Mr.  Keathley  received  his  B.S.  in  Petroleum
Engineering in 1977 from the University of Oklahoma.

J.  Steven  Person, Vice President, Marketing, assumed his responsibilities
with  the Managing General Partner as National Marketing Director in  1989.
Prior  to joining the Managing General Partner, Mr. Person served  as  Vice
President  of  Marketing  for CRI, Inc., and was  associated  with  Capital
Financial  Group and Dean Witter (1983).  He received a B.B.A. from  Baylor
University in 1982 and an M.D.A. from Houston Baptist University in 1987.

Paul  L.  Morris has served as a Director of Southwest Royalties  Holdings,
Inc.  since August 1998 and Southwest Royalties, Inc. since September 1998.
Mr. Morris is President and CEO of Wagner & Brown, Ltd., one of the largest
independently owned oil and gas companies in the United States.   Prior  to
his  position with Wagner & Brown, Mr. Morris served as President of Banner
Energy and in various managerial positions with Columbia Gas System, Inc.

<PAGE>
Key Employees

Accounting  and Administrative Officer - Debbie A. Brock, age  46,  assumed
her  position with the Managing General Partner in 1991.  Prior to  joining
the Managing General Partner, Ms. Brock was employed with Western Container
Corporation   as  Accounting  Manager  (1982-1990),  Synthetic   Industries
(Texas), Inc. as Accounting Manager (1976-1982) and held various accounting
positions in the manufacturing industry (1971-1975).  Ms. Brock received  a
B.B.A. from the University of Houston.

Controller - Robert A. Langford, age 49, assumed his responsibilities  with
the  Managing  General Partner in 1992.  Mr. Langford received  his  B.B.A.
degree  in  Accounting  in 1975 from the University  of  Central  Arkansas.
Prior  to  joining the Managing General Partner,  Mr. Langford was employed
with Forest Oil Corporation as Corporate Coordinator, Regional Coordinator,
Accounting  Manager.  He held various other positions  from  1982-1992  and
1976-1980  and was Assistant Controller of National Oil Company from  1980-
1982.

Financial  Reporting  Manager - Bryan Dixon, C.P.A., age  32,  assumed  his
responsibilities  with the Managing General Partner  in  1992.   Mr.  Dixon
received his B.B.A. degree in Accounting in 1988 from Texas Tech University
in  Lubbock,  Texas.   Prior to joining the Managing General  Partner,  Mr.
Dixon was employed as a Senior Auditor with Johnson, Miller & Company  from
1991-1992 and Audit Supervisor for Texas Tech University and the Texas Tech
University Health Sciences Center from 1988-1991.

Production   Superintendent  -  Steve  C.  Garner,  age  57,  assumed   his
responsibilities   with   the  Managing  General  Partner   as   Production
Superintendent  in  July,  1989.  Prior to  joining  the  Managing  General
Partner,  Mr. Garner was employed 16 years by Shell Oil Company working  in
all  phases of oil field production as operations foreman, one and one-half
years  with Petroleum Corporation of Delaware as Production Superintendent,
six  years  as  an independent engineering consultant, and  one  year  with
Citation  Oil & Gas Corp. as a workover, completion and production foreman.
Mr.  Garner has worked extensively in the Permian Basin oil field  for  the
last 25 years.

Tax  Manager  -  Carolyn  Cookson, age 42, assumed her  position  with  the
Managing  General  Partner in April, 1989.  Prior to joining  the  Managing
General  Partner,  Ms. Cookson was employed as Director of  Taxes  at  C.F.
Lawrence  &  Associates,  Inc. from 1983 to  1989,  and  worked  in  public
accounting  at McCleskey, Cook & Green, P.C. from 1981 to 1983  and  Deanna
Brady,  C.P.A.  from 1980 to 1981.  She is a member of  the  Permian  Basin
Chapter  of the Petroleum Accountants' Society, and serves on its Board  of
Directors  and  is  liaison to the Tax Committee.  Ms. Cookson  received  a
B.B.A. in accounting from New Mexico State University.

<PAGE>
Investor  Relations Manager - Sandra K. Flournoy, age 52, came to Southwest
Royalties,  Inc.  in 1988 from Parker & Parsley Petroleum,  where  she  was
Assistant Manager of Investor Services and Broker/Dealer Relations for  two
years.   Prior  to that, Ms. Flournoy was Administrative Assistant  to  the
Superintendent at Greenwood ISD for four years.

In certain instances, the Managing General Partner will engage professional
petroleum   consultants   and  other  independent  contractors,   including
engineers   and   geologists  in  connection  with  property  acquisitions,
geological  and  geophysical  analysis,  and  reservoir  engineering.   The
Managing  General Partner believes that, in addition to its own  "in-house"
staff,  the utilization of such consultants and independent contractors  in
specific  instances  and  on  an  "as-needed"  basis  allows  for   greater
flexibility  and greater opportunity to perform its oil and gas  activities
more economically and effectively.

Item 11.  Executive Compensation

The  Partnership  does not have any directors or executive  officers.   The
executive officers of the Managing General Partner do not receive any  cash
compensation,  bonuses, deferred compensation or compensation  pursuant  to
any  type  of  plan,  from the Partnership.  The Managing  General  Partner
received  $72,000,  during 1998, 1997 and 1996 as an annual  administrative
fee.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

There  are  no  limited partners who own of record, or  are  known  by  the
Managing General Partner to beneficially own, more than five percent of the
Partnership's limited partnership interests.

The  Managing  General Partner owns a nine percent interest  as  a  general
partner.   Through repurchase offers to the limited partners, the  Managing
General  Partner  also  owns 922.5 limited partner units,  a  9.1%  limited
partner  interest.  The Managing General Partner total percentage  interest
ownership in the Partnership is 16.5%.

No  officer or director of the Managing General Partner owns Units  in  the
Partnership.  H. H. Wommack, III, as the individual general partner of  the
Partnership,  owns  a  one  percent interest as  a  general  partner.   The
officers  and  directors  of the Managing General  Partner  are  considered
beneficial  owners of the limited partner units acquired  by  the  Managing
General  Partner by virtue of their status as such.  A list  of  beneficial
owners  of limited partner units, acquired by the Managing General Partner,
is as follows:

<PAGE>
                                                                 Amount and
                                                  Nature of       Percent
                     Name and Address of          Beneficial         of
 Title of Class        Beneficial Owner           Ownership        Class
-------------------  ---------------------------  ---------------  -------
Limited Partnership  Southwest Royalties, Inc.    Directly Owns      9.1%
 Interest            Managing General Partner     922.5 Units
                     407 N. Big Spring Street
                     Midland, TX  79701

Limited Partnership  H. H. Wommack, III           Indirectly Owns    9.1%
 Interest            Chairman of the Board,       922.5 Units
                     President, CEO, Treasurer
                     and Director of Southwest
                     Royalties, Inc., the
                     Managing General Partner
                     407 N. Big Spring Street
                     Midland, TX  79701

Limited Partnership  H. Allen Corey               Indirectly Owns    9.1%
 Interest            Secretary and Director of    922.5 Units
                     Southwest Royalties, Inc.,
                     the Managing General
                     Partner
                     633 Chestnut Street
                     Chattanooga, TN  37450-1800

Limited Partnership  Bill E. Coggin               Indirectly Owns    9.1%
 Interest            Vice President and CFO of    922.5 Units
                     Southwest Royalties, Inc.,
                     the Managing General
                     Partner
                     407 N. Big Spring Street
                     Midland, TX  79701

Limited Partnership  Jon P. Tate                  Indirectly Owns    9.1%
 Interest            Vice President, Land and     922.5 Units
                     Assistant Secretary of
                     Southwest Royalties, Inc.,
                     the Managing General
                     Partner
                     407 N. Big Spring Street
                     Midland, TX  79701

Limited Partnership  J. Steven Person             Indirectly Owns    9.1%
 Interest            Vice President, Marketing    922.5 Units
                     of Southwest Royalties, Inc.,
                     the Managing General
                     Partner
                     407 N. Big Spring Street
                     Midland, TX  79701

<PAGE>
                                                                 Amount and
                                                  Nature of       Percent
                     Name and Address of          Beneficial         of
 Title of Class        Beneficial Owner           Ownership        Class
-------------------  ---------------------------  ---------------  -------
Limited Partnership  R. Douglas Keathley          Indirectly Owns    9.1%
 Interest            Vice President,              922.5 Units
                     Operations of Southwest
                     Royalties, Inc., the
                     Managing General Partner
                     407 N. Big Spring Street
                     Midland, TX  79701

Limited Partnership  Paul L. Morris               Indirectly Owns    9.1%
 Interest            Director, of Southwest       922.5 Units
                     Royalties, Inc., the
                     Managing General Partner
                     407 N. Big Spring Street
                     Midland, TX  79701

There  are no arrangements known to the Managing General Partner which  may
at a subsequent date result in a change of control of the Partnership.

Item 13.  Certain Relationships and Related Transactions

In 1998, the Managing General Partner received $72,000 as an administrative
fee.   This  amount  is  part  of the general and  administrative  expenses
incurred by the Partnership.

In  some  instances the Managing General Partner and certain  officers  and
employees  may  be working interest owners in an oil and  gas  property  in
which  the Partnership also has a net profits interest.  Certain properties
in  which  the  Partnership has an interest are operated  by  the  Managing
General  Partner,  who was paid approximately $102,200  for  administrative
overhead attributable to operating such properties during 1998.

Certain  subsidiaries or affiliates of the Managing General Partner perform
various  oilfield services for properties in which the Partnership owns  an
interest.  Such services aggregated approximately $2,600 for the year ended
December 31, 1998.

In  the  opinion  of  management, the terms of the above  transactions  are
similar to ones with unaffiliated third parties.

<PAGE>
                                 Part IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

          (a)(1)  Financial Statements:

                  Included in Part II of this report --

                  Reports of Independent Accountants
                  Balance Sheets
                  Statements of Operations
                  Statement of Changes in Partners' Equity
                  Statements of Cash Flows
                  Notes to Financial Statements

                     (2)  Schedules required by Article 12 of Regulation S-
                  X  are either omitted because they are not applicable  or
                  because  the  required  information  is  shown   in   the
                  financial statements or the notes thereto.

             (3)  Exhibits:

                                      4      (a)   Certificate  of  Limited
                          Partnership  of Southwest Royalties Institutional
                          Income  Fund  VIII-B, L.P.,  dated  November  30,
                          1987.   (Incorporated by reference  from  Partner
                          ship's S-1 Registration Statement, File Number 33-
                          18852 effective March 31, 1988.)

                                            (b)    Agreement   of   Limited
                          Partnership  of Southwest Royalties Institutional
                          Income  Fund  VIII-B, L.P. dated July  11,  1988.
                          (Incorporated  by  reference  from  Partnership's
                          Form 10-K for the fiscal year ended December  31,
                          1988.)

                  27 Financial Data Schedule

          (b)  Reports on Form 8-K

                  There  were  no  reports filed on  Form  8-K  during  the
              quarter ended December 31, 1998.

<PAGE>
                                Signatures


Pursuant  to  the  requirements of Section 13 or 15(d)  of  the  Securities
Exchange  Act  of 1934, the Partnership has duly caused this report  to  be
signed on its behalf by the undersigned, thereunto duly authorized.


                          Southwest Royalties Institutional Income Fund
                          VIII-B, L.P., a Delaware limited partnership


                                                          By:     Southwest
                                  Royalties, Inc., Managing
                                  General Partner


                           By:    /s/ H. H. Wommack, III
                                  -----------------------------
                                                     H.  H.  Wommack,  III,
                                 President


                           Date:  March 31, 1999


Pursuant  to the requirements of the Securities Exchange Act of 1934,  this
report  has  been signed below by the following persons on  behalf  of  the
Partnership and in the capacities and on the dates indicated.


By:    /s/ H. H. Wommack, III
       -----------------------------------
       H. H. Wommack, III, Chairman of the
       Board,  President, Chief Executive
       Officer, Treasurer and      Director


Date:  March 31, 1999


By:    /s/ H. Allen Corey
       -----------------------------
       H. Allen Corey, Secretary and
       Director


Date:  March 31, 1999

<PAGE>