Page 14 of 14
                                 FORM 10-Q


                    SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D. C.  20549

(Mark One)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

                                    OR

( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

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 of                        (I.R.S. Employer
incorporation or organization)                         Identification No.)

                       407 N. Big Spring, Suite 300
                  _________Midland, Texas 79701_________
                 (Address of principal executive offices)

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

Indicate  by  check  mark  whether registrant (1)  has  filed  all  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 _____

         The total number of pages contained in this report is 14.

<PAGE>

                      PART I. - FINANCIAL INFORMATION

Item 1.  Financial Statements

The  unaudited  condensed financial statements included  herein  have  been
prepared  by  the Registrant (herein also referred to as the "Partnership")
in  accordance  with generally accepted accounting principles  for  interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X.  Accordingly, they do not include all of the information
and  footnotes  required  by generally accepted accounting  principles  for
complete   financial  statements.   In  the  opinion  of  management,   all
adjustments necessary for a fair presentation have been included and are of
a  normal  recurring nature.  The financial statements should  be  read  in
conjunction with the audited financial statements and the note thereto  for
the  year ended December 31, 2000 which are found in the Registrant's  Form
10-K  Report  for  2000 filed with the Securities and Exchange  Commission.
The December 31, 2000 balance sheet included herein has been taken from the
Registrant's  2000 Form 10-K Report.  Operating results for the  three  and
nine  month periods ended September 30, 2001 are not necessarily indicative
of the results that may be expected for the full year.

<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.

                              Balance Sheets

                                              September 30,   December 31,
                                                   2001           2000
                                              -------------   ------------
                                               (unaudited)
Assets
------
Current assets:
 Cash and cash equivalents                    $     70,968        101,708
 Receivable from Managing General
  Partner                                          113,493        177,112
                                                 ---------      ---------
   Total current assets                            184,461        278,820
                                                 ---------      ---------
Oil and gas properties - using the
 full-cost method of accounting                  4,133,496      4,133,496
  Less accumulated depreciation,
   depletion and amortization                    3,714,058      3,673,058
                                                 ---------      ---------
   Net oil and gas properties                      419,438        460,438
                                                 ---------      ---------
                                              $    603,899        739,258
                                                 =========      =========
Liabilities and Partners' Equity
--------------------------------
Current liability - Distributions payable     $        709            199
                                                 ---------      ---------
Partners' equity:
 General partners                                   12,701         22,188
 Limited partners                                  590,489        716,871
                                                 ---------      ---------
   Total partners' equity                          603,190        739,059
                                                 ---------      ---------
                                              $    603,899        739,258
                                                 =========      =========

<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.

                         Statements of Operations
                                (unaudited)


                                Three Months Ended    Nine Months Ended
                                  September 30,         September 30,
                                  2001      2000        2001      2000
                                  ----      ----        ----      ----
Revenues
--------
Income from net profits
 interests                   $   142,584   206,932     489,733   582,002
Interest                             972     1,846       3,926     4,400
Miscellaneous income                   -         -           -        59
                                 -------   -------     -------   -------
                                 143,556   208,778     493,659   586,461
                                 -------   -------     -------   -------
Expenses
--------
General and administrative        19,587    19,349      58,529    61,393
Depreciation, depletion and
 amortization                     19,000    11,000      41,000    26,000
                                 -------   -------     -------   -------
                                  38,587    30,349      99,529    87,393
                                 -------   -------     -------   -------
Net income                   $   104,969   178,429     394,130   499,068
                                 =======   =======     =======   =======



Net income allocated to:

 Managing General Partner    $    11,157    17,049      39,162    47,256
                                 =======   =======     =======   =======
 General Partner             $     1,240     1,894       4,351     5,251
                                 =======   =======     =======   =======
 Limited Partners            $    92,572   159,486     350,617   446,561
                                 =======   =======     =======   =======
  Per limited partner unit   $      9.12     15.72        34.55    44.01
                                 =======   =======     =======   =======

<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.

                         Statements of Cash Flows
                                (unaudited)


                                                      Nine Months Ended
                                                        September 30,
                                                       2001       2000
                                                       ----      ----
Cash flows from operating activities

 Cash received from income from net
  profits interests                                $  542,713    503,965
 Cash paid to suppliers                              (47,889)   (45,303)
 Interest received                                      3,926      4,400
                                                      -------    -------
  Net cash provided by operating activities           498,750    463,062
                                                      -------    -------
Cash flows used in financing activities

 Distributions to partners                          (529,490)  (425,479)
                                                      -------    -------
Net (decrease) increase in cash and cash equivalents            (30,740)
37,583

 Beginning of period                                  101,708     65,039
                                                      -------    -------
 End of period                                     $   70,968    102,622
                                                      =======    =======
Reconciliation of net income to net
 cash provided by operating activities

Net income                                         $  394,130    499,068

Adjustments to reconcile net income to
 net cash provided by operating activities

 Depreciation, depletion and amortization              41,000     26,000
 Decrease (increase) in receivables                    52,981   (78,096)
 Increase in payables                                  10,639     16,090
                                                    ---------  ---------
Net cash provided by operating activities          $  498,750    463,062
                                                    =========  =========


<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.

2.   Summary of Significant Accounting Policies
     The  interim financial information as of September 30, 2001,  and  for
     the  three  and  nine months ended September 30, 2001,  is  unaudited.
     Certain  information  and footnote disclosures  normally  included  in
     financial  statements prepared in accordance with  generally  accepted
     accounting principles have been condensed or omitted in this Form 10-Q
     pursuant  to the rules and regulations of the Securities and  Exchange
     Commission.   However,  in  the opinion of management,  these  interim
     financial  statements include all the necessary adjustments to  fairly
     present  the  results of the interim periods and all such  adjustments
     are  of a normal recurring nature.  The interim consolidated financial
     statements  should  be read in conjunction with the audited  financial
     statements for the year ended December 31, 2000.

<PAGE>
Item 2.  Management's  Discussion and Analysis of Financial  Condition  and
       Results of Operations

General
Southwest Royalties Institutional Income Fund VIII-B, L.P. was organized as
a  Delaware limited partnership on November 30, 1987. The offering of  such
limited  partnership  interests  began  March  31,  1988,  minimum  capital
requirements were met July 11, 1988, and concluded on March 31,  1989  with
total limited partner contributions of $5,073,500.

The Partnership was formed to acquire royalty and net profits interests  in
producing  oil  and  gas properties, to produce and market  crude  oil  and
natural  gas  produced  from such properties, and  to  distribute  the  net
proceeds from operations to the limited and general partners.  Net revenues
from  producing  oil  and gas properties will not be  reinvested  in  other
revenue  producing  assets except to the extent that production  facilities
and wells are improved or reworked or where methods are employed to improve
or enable more efficient recovery of oil and gas reserves.

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 farmout arrangements, sales of properties, and 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 partners  is
therefore expected to fluctuate in later years based on these factors.

Based  on  current  conditions, management anticipates the  possibility  of
performing workovers during the next twelve months.  The Partnership  could
possibly experience a normal decline of 8% to 10% per year.

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.

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 September 30, 2001, the net capitalized costs  did
not exceed the estimated present value of oil and gas reserves.

<PAGE>

Results of Operations

A.  General Comparison of the Quarters Ended September 30, 2001 and 2000

The  following  table  provides certain information  regarding  performance
factors for the quarters ended September 30, 2001 and 2000:

                                                 Three Months
                                                    Ended        Percentage
                                                September 30,     Increase
                                                2001      2000   (Decrease)
                                                ----      ----   ---------
Average price per barrel of oil            $   24.41     29.73    (18%)
Average price per mcf of gas               $    2.93      5.48    (47%)
Oil production in barrels                     10,500    10,700     (2%)
Gas production in mcf                         12,300    10,300      19%
Income from net profits interests          $ 142,584   206,932    (31%)
Partnership distributions                  $ 150,000   200,000    (25%)
Limited partner distributions              $ 135,000   180,000    (25%)
Per unit distribution to limited partners  $   13.30     17.74    (25%)
Number of limited partner units               10,147    10,147

Revenues

The  Partnership's income from net profits interests decreased to  $142,584
from  $206,932  for  the  quarters  ended  September  30,  2001  and  2000,
respectively,  a  decrease  of 31%.  The principal  factors  affecting  the
comparison  of  the  quarters ended September 30,  2001  and  2000  are  as
follows:

1.   The  average  price  for a barrel of oil received by  the  Partnership
     decreased  during the quarter ended September 30, 2001 as compared  to
     the  quarter  ended  September 30, 2000 by 18%, or $5.32  per  barrel,
     resulting  in a decrease of approximately $55,900 in income  from  net
     profits  interests.  Oil sales represented 88% of total  oil  and  gas
     sales  during the quarter ended September 30, 2001 as compared to  85%
     during the quarter ended September 30, 2000.

     The  average  price  for  an mcf of gas received  by  the  Partnership
     decreased  during the same period by 47%, or $2.55 per mcf,  resulting
     in  a  decrease  of approximately $31,400 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
     $87,300.  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 200 barrels or  2%  during  the
   quarter  ended  September  30, 2001 as compared  to  the  quarter  ended
   September  30, 2000, resulting in a decrease of approximately $5,900  in
   income from net profits interests.

    Gas production increased approximately 2,000 mcf or 19% during the same
    period,  resulting  in an increase of approximately $11,000  in  income
    from net profits interests.

    The  net total increase in income from net profits interests due to the
    change  in  production is approximately $5,100.  The  increase  in  gas
    production  is due primarily to one well, which a gas leak occurred  in
    the  main line during 2000 and production as of September 30,  2001  is
    back on-line.

3. Lease   operating  costs  and  production  taxes  were  9%   lower,   or
   approximately $14,500 less during the quarter ended September  30,  2001
   as compared to the quarter ended September 30, 2000.

Costs and Expenses

Total costs and expenses increased to $38,587 from $30,349 for the quarters
ended  September 30, 2001 and 2000, respectively, an increase of 27%.   The
increase  is  the  result  of  higher depletion  expense  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 1%
    or  approximately $200 during the quarter ended September 30,  2001  as
    compared to the quarter ended September 30, 2000.

2.  Depletion  expense increased to $19,000 for the quarter ended September
    30, 2001 from $11,000 for the same period in 2000.  This represents  an
    increase  of 73%.  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.   Contributing
    factors  to  the increase in depletion expense between the  comparative
    periods were the decrease in the price of oil and gas used to determine
    the Partnership's reserves for October 1, 2001 as compared to 2000, and
    the decrease in oil and gas revenues received by the Partnership during
    2001 as compared to 2000.


<PAGE>

B.   General Comparison of the Nine Month Periods Ended September 30,  2001
and 2000

The  following  table  provides certain information  regarding  performance
factors for the nine month periods ended September 30, 2001 and 2000:

                                                 Nine Months
                                                    Ended        Percentage
                                                September 30,     Increase
                                                2001      2000   (Decrease)
                                                ----      ----   ---------
Average price per barrel of oil            $   25.59     28.18     (9%)
Average price per mcf of gas               $    4.56      4.14      10%
Oil production in barrels                     30,000    30,500     (2%)
Gas production in mcf                         34,400    32,900       5%
Income from net profits interests          $ 489,733   582,002    (16%)
Partnership distributions                  $ 530,000   425,000      25%
Limited partner distributions              $ 477,000   382,500      25%
Per unit distribution to limited partners  $   47.01     37.70      25%
Number of limited partner units               10,147    10,147

Revenues

The  Partnership's income from net profits interests decreased to  $489,733
from  $582,002  for  the nine months ended September  30,  2001  and  2000,
respectively,  a  decrease  of 16%.  The principal  factors  affecting  the
comparison  of  the nine months ended September 30, 2001 and  2000  are  as
follows:

1.  The  average  price  for a barrel of oil received  by  the  Partnership
    decreased  during the nine months ended September 30, 2001 as  compared
    to the nine months ended September 30, 2000 by 9%, or $2.59 per barrel,
    resulting  in  a decrease of approximately $77,700 in income  from  net
    profits  interests.  Oil sales represented 83% of  total  oil  and  gas
    sales  during the nine months ended September 30, 2001 as  compared  to
    86% during the nine months ended September 30, 2000.

    The  average  price  for  an  mcf of gas received  by  the  Partnership
    increased during the same period by 10%, or $.42 per mcf, resulting  in
    an  increase  of  approximately $14,400  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
    $63,300.   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  2%  during  the
   nine  months  ended September 30, 2001 as compared to  the  nine  months
   ended  September  30,  2000,  resulting in a decrease  of  approximately
   $14,100 in income from net profits interests.

    Gas  production increased approximately 1,500 mcf or 5% during the same
    period, resulting in an increase of approximately $6,200 in income from
    net profits interests.

    The  net total decrease in income from net profits interests due to the
    change in production is approximately $7,900.

3.  Lease  operating  costs  and  production  taxes  were  5%  higher,   or
    approximately  $21,200 more during the nine months ended September  30,
    2001 as compared to the nine months ended September 30, 2000.

Costs and Expenses

Total  costs  and expenses increased to $99,529 from $87,393 for  the  nine
months ended September 30, 2001 and 2000, respectively, an increase of 14%.
The increase is the result of higher depletion expense, partially offset by
a decrease in 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 5%
    or approximately $2,900 during the nine months ended September 30, 2001
    as compared to the nine months ended September 30, 2000.

2.  Depletion  expense  increased to $41,000  for  the  nine  months  ended
    September  30,  2001 from $26,000 for the same period  in  2000.   This
    represents an increase of 58%.  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.
    Contributing factors to the increase in depletion expense  between  the
    comparative periods were the decrease in the price of oil and gas  used
    to determine the Partnership's reserves for October 1, 2001 as compared
    to  2000,  and  the decrease in oil and gas revenues  received  by  the
    Partnership during 2001 as compared to 2000.

<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 $498,700  in
the  nine  months  ended  September 30, 2001 as compared  to  approximately
$463,100  in the nine months ended September 30, 2000.  The primary  source
of the 2001 cash flow from operating activities was profitable operations.

Cash flows used in financing activities were approximately $529,500 in  the
nine  months ended September 30, 2001 as compared to approximately $425,500
in  the  nine  months ended September 30, 2000.  The only use in  financing
activities was the distributions to partners.

Total  distributions during the nine months ended September 30,  2001  were
$530,000  of  which  $477,000 was distributed to the limited  partners  and
$53,000  to  the  general partners.  The per unit distribution  to  limited
partners during the nine months ended September 30, 2001 was $47.01.  Total
distributions during the nine months ended September 30, 2000 were $425,000
of  which  $382,500 was distributed to the limited partners and $42,500  to
the general partners.  The per unit distribution to limited partners during
the nine months ended September 30, 2000 was $37.70.

The  source  for  the  2001  distributions of  $530,000  was  oil  and  gas
operations of approximately $498,700, with the balance from available  cash
on  hand  at  the  beginning  of the quarter.  The  sources  for  the  2000
distributions  of  $425,000  were oil and gas operations  of  approximately
$463,100,   resulting  in  excess  cash  for  contingencies  or  subsequent
distributions.

Since  inception of the Partnership, cumulative monthly cash  distributions
of  $6,941,823 have been made to the partners.  As of September  30,  2001,
$6,268,125 or $617.73 per limited partner unit has been distributed to  the
limited partners, representing a 124% return of the capital contributed.

As  of  September 30, 2001, the Partnership had approximately  $183,800  in
working  capital.   The  Managing  General  Partner  knows  of  no  unusual
contractual commitments and believes the revenues generated from operations
are adequate to meet the needs of the Partnership.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

The Partnership is not a party to any derivative or
embedded derivative instruments.

<PAGE>
                        PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         None

Item 3.  Defaults Upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

             (a)  No reports on Form 8-K were filed during the quarter for
             which this report is filed.


<PAGE>

                                SIGNATURES


Pursuant  to the requirements of the Securities Exchange Act of  1934,  the
registrant  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/ Bill E. Coggin
                                        ------------------------------
                                        Bill E. Coggin, Vice President
                                        and Chief Financial Officer

Date:     November 14, 2001

<PAGE>