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, 1997

                                    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, 1996 which are found in the Registrant's  Form
10-K  Report  for  1996 filed with the Securities and Exchange  Commission.
The December 31, 1996 balance sheet included herein has been taken from the
Registrant's  1996 Form 10-K Report.  Operating results for the  three  and
nine  month periods ended September 30, 1997 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,
                                                   1997           1996
                                              -------------   ------------
                                               (unaudited)
Assets

Current assets
 Cash and cash equivalents                     $   23,819         29,317
 Receivable from Managing General Partner          95,424        182,243
---------                                      ---------
     Total current assets                         119,243        211,560
                                                ---------      ---------
Oil and gas properties - using the
 full cost method of accounting                 4,196,749      4,196,749
  Less accumulated depreciation,
   depletion and amortization                   2,992,434      2,927,434
                                                ---------      ---------
     Net oil and gas properties                 1,204,315      1,269,315
                                                ---------      ---------
                                               $1,323,558      1,480,875
                                                =========      =========

Liabilities and Partners' Equity

Current liability - Distribution payable       $      293            171
---------                                      ---------
 Partners' equity
  General partners                                 10,499         19,743
  Limited partners                              1,312,766      1,460,961
                                                ---------      ---------
     Total partners' equity                     1,323,265      1,480,704
                                                ---------      ---------
                                               $1,323,558      1,480,875
                                                =========      =========
<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                                     
                         Statements of Operations
                                (unaudited)


                                Three Months Ended    Nine Months Ended
                                  September 30,         September 30,
                                  1997      1996        1997      1996

Revenues

Income from net profits
 interests                   $   105,841   142,274     441,902   489,104
Interest                             370       517       1,267     1,447
                                 -------   -------     -------   -------
                                 106,211   142,791     443,169   490,551
                                 -------   -------     -------   -------
Expenses

General and administrative        18,181    18,297      62,608    63,102
Depreciation, depletion and
 amortization                     19,000    38,000      65,000   111,000
                                 -------   -------     -------   -------
                                  37,181    56,297     127,608   174,102
                                 -------   -------     -------   -------
Net income                   $    69,030    86,494     315,561   316,449
                                 =======   =======     =======   =======



Net income allocated to:

 Managing General Partner    $     7,923    11,204      34,250    38,470
                                 =======   =======     =======   =======
 General Partner             $       880     1,245       3,806     4,274
                                 =======   =======     =======   =======
 Limited Partners            $    60,227    74,045     277,505   273,705
                                 =======   =======     =======   =======
  Per limited partner unit   $      5.94      7.30        27.35    26.97
                                 =======   =======     =======   =======

<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                                     
                         Statements of Cash Flows
                                (unaudited)


                                                      Nine Months Ended
                                                        September 30,
                                                       1997       1996
Cash flows from operating activities

 Cash received from income from net
  profits interests                                $  528,721    470,943
 Cash paid to suppliers                              (62,608)   (63,034)
 Interest received                                      1,267      1,447
                                                      -------    -------

  Net cash provided by operating activities           467,380    409,356
                                                      -------    -------
Cash flows provided by investing activities

 Cash received from sale of oil and gas
  property interest                                         -      1,000
                                                      -------    -------
Cash flows used in financing activities

 Distributions to partners                          (472,878)  (412,436)
                                                      -------    -------
Net decrease in cash and cash equivalents             (5,498)    (2,080)

 Beginning of period                                   29,317     38,072
                                                      -------    -------
 End of period                                     $   23,819     35,992
=======                                            =======

                                                             (continued)
<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                                     
                    Statements of Cash Flows, continued
                                (unaudited)


                                                      Nine Months Ended
                                                        September 30,
                                                       1997       1996
Reconciliation of net income to net cash
 provided by operating activities

Net income                                         $  315,561    316,449

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

 Depreciation, depletion and amortization              65,000    111,000
 (Increase) decrease in receivables                    86,819   (18,093)
                                                    ---------  ---------
Net cash provided by operating activities          $  467,380    409,356
                                                    =========  =========


<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 performing  workovers
during  the  next  two  years to enhance production.  The  Partnership  may
undergo  an  increase later in 1997 and possibly in 1998.  Thereafter,  the
Partnership  could possibly experience a normal decline of 8%  to  10%  per
year.

<PAGE>

Results of Operations

A.  General Comparison of the Quarters Ended September 30, 1997 and 1996

The  following  table  provides certain information  regarding  performance
factors for the quarters ended September 30, 1997 and 1996:

                                                 Three Months
                                                    Ended        Percentage
                                                September 30,     Increase
                                                1997      1996   (Decrease)

Average price per barrel of oil            $   18.03     21.61    (17%)
Average price per mcf of gas               $    2.44      2.26       8%
Oil production in barrels                     12,100    13,800    (12%)
Gas production in mcf                         13,700    14,600     (6%)
Income from net profits interests          $ 105,841   142,274    (26%)
Partnership distributions                  $ 111,000   120,000     (8%)
Limited partner distributions              $  99,900   108,000     (8%)
Per unit distribution to limited partners  $    9.85     10.64     (8%)
Number of limited partner units               10,147    10,147

Revenues

The  Partnership's income from net profits interests decreased to  $105,841
from  $142,274  for  the  quarters  ended  September  30,  1997  and  1996,
respectively,  a  decrease  of 26%.  The principal  factors  affecting  the
comparison  of  the  quarters ended September 30,  1997  and  1996  are  as
follows:

1.   The  average  price  for a barrel of oil received by  the  Partnership
     decreased  during the quarter ended September 30, 1997 as compared  to
     the  quarter  ended  September 30, 1996 by 17%, or $3.58  per  barrel,
     resulting  in a decrease of approximately $49,400 in income  from  net
     profits  interests. Oil sales represented 87% of  total  oil  and  gas
     sales  during the quarter ended September 30, 1997 as compared to  90%
     during the quarter ended September 30, 1996.

     The  average  price  for  an mcf of gas received  by  the  Partnership
     increased during the same period by 8%, or $.18 per mcf, resulting  in
     an  increase  of  approximately $2,600  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
     $46,800.  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 1,700 barrels or 12% during  the
   quarter  ended  September  30, 1997 as compared  to  the  quarter  ended
   September 30, 1996, resulting in a decrease of approximately $30,700  in
   income from net profits interests.

    Gas  production decreased approximately 900 mcf or 6% during  the  same
    period, resulting in a decrease of approximately $2,200 in income  from
    net profits interests.

    The  total  decrease in income from net profits interests  due  to  the
    change  in  production  is  approximately  $32,900.   The  decrease  is
    primarily attributable to downtime due to mechanical problems.

3.  Lease  operating  costs  and  production  taxes  were  23%  lower,   or
    approximately $43,800 less during the quarter ended September 30,  1997
    as  compared to the quarter ended September 30, 1996.  The decrease  is
    primarily  attributable to workover costs incurred in 1996 as  compared
    to 1997.

Costs and Expenses

Total costs and expenses decreased to $37,181 from $56,297 for the quarters
ended  September 30, 1997 and 1996, respectively, a decrease of  34%.   The
decrease  is  the  result of lower general and administrative  expense  and
depletion 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 $100 during the quarter ended September 30,  1997  as
    compared to the quarter ended September 30, 1996.

2.  Depletion  expense decreased to $19,000 for the quarter ended September
    30,  1997 from $38,000 for the same period in 1996.  This represents  a
    decrease  of 50%.  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.  Two contributing
    factors  to  the  decline in depletion expense between the  comparative
    periods  were  the increase in the price of oil used to  determine  the
    Partnership's reserves for January 1, 1997 as compared to 1996 and  the
    decline in gross oil and gas revenues.

<PAGE>

B.   General Comparison of the Nine Month Periods Ended September 30,  1997
and 1996

The  following  table  provides certain information  regarding  performance
factors for the nine month periods ended September 30, 1997 and 1996:

                                                 Nine Months
                                                    Ended        Percentage
                                                September 30,     Increase
                                                1997      1996   (Decrease)

Average price per barrel of oil            $   19.47     20.12     (3%)
Average price per mcf of gas               $    2.55      2.41       6%
Oil production in barrels                     37,200    43,100    (14%)
Gas production in mcf                         41,800    46,700    (10%)
Income from net profits interests          $ 441,902   489,104    (10%)
Partnership distributions                  $ 473,000   412,540      15%
Limited partner distributions              $ 425,700   371,840      14%
Per unit distribution to limited partners  $   41.95     36.65      14%
Number of limited partner units               10,147    10,147      14%

Revenues

The  Partnership's income from net profits interests decreased to  $441,902
from  $489,104  for  the nine months ended September  30,  1997  and  1996,
respectively,  a  decrease  of 10%.  The principal  factors  affecting  the
comparison  of  the nine months ended September 30, 1997 and  1996  are  as
follows:

1.  The  average  price  for a barrel of oil received  by  the  Partnership
    decreased  during the nine months ended September 30, 1997 as  compared
    to  the nine months ended September 30, 1996 by 3%, or $.65 per barrel,
    resulting  in  a decrease of approximately $28,000 in income  from  net
    profits  interests.  Oil sales represented 87% of  total  oil  and  gas
    sales  during the nine months ended September 30, 1997 as  compared  to
    89% during the nine months ended September 30, 1996.

    The  average  price  for  an  mcf of gas received  by  the  Partnership
    increased  during the same period by 6%, or $.14 per mcf, resulting  in
    an  increase  of  approximately  $6,500  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
    $21,500.   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 5,900 barrels or 14% during  the
   nine  months  ended September 30, 1997 as compared to  the  nine  months
   ended  September  30,  1996,  resulting in a decrease  of  approximately
   $114,900 in income from net profits interests.

    Gas production decreased approximately 4,900 mcf or 10% during the same
    period, resulting in a decrease of approximately $12,500 in income from
    net profits interests.

    The  total  decrease in income from net profits interests  due  to  the
    change  in  production  is  approximately $127,400.   The  decrease  is
    primarily attributable to downtime due to mechanical problems.

3.  Lease  operating  costs  and  production  taxes  were  21%  lower,   or
    approximately $101,400 less during the nine months ended September  30,
    1997  as  compared to the nine months ended September  30,  1996.   The
    decrease is primarily attributable to workover costs incurred  in  1996
    as compared to 1997.

Costs and Expenses

Total  costs and expenses decreased to $127,608 from $174,102 for the  nine
months ended September 30, 1997 and 1996, respectively, a decrease of  27%.
The  decrease is the result of lower general and administrative expense and
depletion 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 $500 during the nine months ended September 30,  1997
    as compared to the nine months ended September 30, 1996.

2.  Depletion  expense  decreased to $65,000  for  the  nine  months  ended
    September  30,  1997 from $111,000 for the same period in  1996.   This
    represents a decrease of 41%.  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.   Two
    contributing  factors to the decline in depletion expense  between  the
    comparative  periods  were the increase in the price  of  oil  used  to
    determine the Partnership's reserves for January 1, 1997 as compared to
    1996 and the decline in gross oil and gas revenues.

<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 $467,400  in
the  nine  months  ended  September 30, 1997 as compared  to  approximately
$409,400  in the nine months ended September 30, 1996.  The primary  source
of the 1997 cash flow from operating activities was profitable operations.

There  were  no  cash flows provided by investing activities  in  the  nine
months  ended September 30, 1997 as compared to $1,000 in the  nine  months
ended September 30, 1996.

Cash flows used in financing activities were approximately $472,900 in  the
nine  months ended September 30, 1997 as compared to approximately $412,400
in  the  nine  months ended September 30, 1996.  The only use in  financing
activities was the distributions to partners.

Total  distributions during the nine months ended September 30,  1997  were
$473,000  of  which  $425,700 was distributed to the limited  partners  and
$47,300  to  the  general partners.  The per unit distribution  to  limited
partners during the nine months ended September 30, 1997 was $41.95.  Total
distributions during the nine months ended September 30, 1996 were $412,540
of  which  $371,840 was distributed to the limited partners and $40,700  to
the general partners.  The per unit distribution to limited partners during
the nine months ended September 30, 1996 was $36.65.

The  source  for  the  1997  distributions of  $473,000  was  oil  and  gas
operations of approximately $467,400, with the balance from available  cash
on  hand  at  the  beginning  of the period.   The  sources  for  the  1996
distributions  of  $412,540  were oil and gas operations  of  approximately
$409,400  and the change in the oil and gas properties of $1,000, with  the
balance from available cash on hand at the beginning of the period.

Since  inception of the Partnership, cumulative monthly cash  distributions
of  $5,233,115 have been made to the partners.  As of September  30,  1997,
$4,728,241 or $465.97 per limited partner unit has been distributed to  the
limited partners, representing a 93% return of the capital contributed.

As  of  September 30, 1997, the Partnership had approximately  $119,000  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.

<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)Exhibits:

             27 Financial Data Schedule

             (b)  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 15, 1997

<PAGE>