Page 15 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, 1998

                                    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 15.

<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, 1997 which are found in the Registrant's  Form
10-K  Report  for  1997 filed with the Securities and Exchange  Commission.
The December 31, 1997 balance sheet included herein has been taken from the
Registrant's  1997 Form 10-K Report.  Operating results for the  three  and
nine  month periods ended September 30, 1998 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,
                                                   1998           1997
                                              -------------   ------------
                                               (unaudited)
Assets

Current assets
 Cash and cash equivalents                     $   21,275          3,347
 Receivable from Managing General Partner          30,724        122,681
 Other receivable                                       -         47,829
                                                ---------      ---------
     Total current assets                          51,999        173,857
                                                ---------      ---------
Oil and gas properties - using the
 full cost method of accounting                 4,143,478      4,147,890
  Less accumulated depreciation,
   depletion and amortization                   3,206,434      3,102,434
                                                ---------      ---------
     Net oil and gas properties                   937,044      1,045,456
                                                ---------      ---------
                                               $  989,043      1,219,313
                                                =========      =========

Liabilities and Partners' Equity

Current liability - Distribution payable       $      439            112
                                                ---------      ---------
 Partners' equity
  General partners                                    266         11,093
  Limited partners                                988,338      1,208,108
                                                ---------      ---------
     Total partners' equity                       988,604      1,219,201
                                                ---------      ---------
                                               $  989,043      1,219,313
                                                =========      =========
<PAGE>

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


                                Three Months Ended    Nine Months Ended
                                  September 30,         September 30,
                                  1998      1997        1998      1997
                                  ----      ----        ----      ----
Revenues

Income from net profits
 interests                   $    29,359   105,841     170,531   441,902
Interest                             390       370       2,023     1,267
Miscellaneous                          3         -           2         -
                                 -------   -------     -------   -------
                                  29,752   106,211     172,556   443,169
                                 -------   -------     -------   -------
Expenses

General and administrative        21,844    18,181      70,833    62,608
Depreciation, depletion and
 amortization                     11,000    19,000     104,000    65,000
                                 -------   -------     -------   -------
                                  32,844    37,181     174,833   127,608
                                 -------   -------     -------   -------
Net income (loss)            $   (3,092)    69,030     (2,277)   315,561
                                 =======   =======     =======   =======



Net income (loss) allocated to:

 Managing General Partner    $       712     7,923       9,155    34,250
                                 =======   =======     =======   =======
 General Partner             $        79       880       1,018     3,806
                                 =======   =======     =======   =======
 Limited Partners            $   (3,883)    60,227    (12,450)   277,505
                                 =======   =======     =======   =======
  Per limited partner unit   $      (.38)     5.94        (1.23)   27.35
                                 =======   =======     =======   =======

<PAGE>

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


                                                      Nine Months Ended
                                                        September 30,
                                                       1998 1997
                                                       ----      ----
Cash flows from operating activities

 Cash received from income from net
  profits interests                                $  234,208    528,721
 Cash paid to suppliers                              (42,551)   (62,608)
 Interest received                                      2,023      1,267
                                                      -------    -------
  Net cash provided by operating activities           193,680    467,380
                                                      -------    -------
Cash flows provided by investing activities

 Cash received from sale of oil and gas
  property interest                                    52,241          -
                                                      -------    -------
Cash flows used in financing activities

 Distributions to partners                          (227,993)  (472,878)
                                                      -------    -------
Net increase (decrease) in cash and cash
 equivalents                                           17,928    (5,498)

 Beginning of period                                    3,347     29,317
                                                      -------    -------
 End of period                                     $   21,275     23,819
                                                      =======    =======

                                                             (continued)
<PAGE>

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


                                                      Nine Months Ended
                                                        September 30,
                                                       1998       1997
                                                       ----       ----
Reconciliation of net income (loss)to net
 cash provided by operating activities

Net income (loss)                                  $  (2,277)    315,561

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

 Depreciation, depletion and amortization             104,000     65,000
 Decrease in receivables                               63,677     86,819
 Increase in payables                                  28,280          -
                                                    ---------  ---------
Net cash provided by operating activities          $  193,680    467,380
                                                    =========  =========


<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 does not  anticipate  performing
workovers  during the next year.  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, 1998, the net capitalized costs  did
not  exceed  the  estimated  present value of  oil  and  gas  reserves.   A
continuation  of  the oil price environment experienced  during  the  first
three  quarters  of  1998  will have an adverse  affect  on  the  Company's
revenues  and  operating cash flow.  Also, further declines in  oil  prices
could result in additional decreases in the carrying value of the Company's
oil and gas properties.

<PAGE>

Results of Operations

A.  General Comparison of the Quarters Ended September 30, 1998 and 1997

The  following  table  provides certain information  regarding  performance
factors for the quarters ended September 30, 1998 and 1997:

                                                 Three Months
                                                    Ended        Percentage
                                                September 30,     Increase
                                                1998      1997   (Decrease)
                                                ----      ----   ---------
Average price per barrel of oil            $   12.10     18.03    (33%)
Average price per mcf of gas               $    1.98      2.44    (19%)
Oil production in barrels                     12,000    12,100     (1%)
Gas production in mcf                         14,700    13,700       7%
Income from net profits interests          $  29,359   105,841    (72%)
Partnership distributions                  $  23,000   111,000    (79%)
Limited partner distributions              $  20,700    99,900    (79%)
Per unit distribution to limited partners  $    2.04      9.85    (79%)
Number of limited partner units               10,147    10,147

Revenues

The  Partnership's income from net profits interests decreased  to  $29,359
from  $105,841  for  the  quarters  ended  September  30,  1998  and  1997,
respectively,  a  decrease  of 72%.  The principal  factors  affecting  the
comparison  of  the  quarters ended September 30,  1998  and  1997  are  as
follows:

1.   The  average  price  for a barrel of oil received by  the  Partnership
     decreased  during the quarter ended September 30, 1998 as compared  to
     the  quarter  ended  September 30, 1997 by 33%, or $5.93  per  barrel,
     resulting  in a decrease of approximately $71,800 in income  from  net
     profits  interests. Oil sales represented 83% of  total  oil  and  gas
     sales  during the quarter ended September 30, 1998 as compared to  87%
     during the quarter ended September 30, 1997.

     The  average  price  for  an mcf of gas received  by  the  Partnership
     decreased during the same period by 19%, or $.46 per mcf, resulting in
     a  decrease  of  approximately  $6,300  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
     $78,100.  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 100 barrels or  1%  during  the
   quarter  ended  September  30, 1998 as compared  to  the  quarter  ended
   September  30, 1997, resulting in a decrease of approximately $1,200  in
   income from net profits interests.

    Gas  production increased approximately 1,000 mcf or 7% during the same
    period, resulting in an increase of approximately $2,000 in income from
    net profits interests.

    The  net total increase in income from net profits interests due to the
    change in production is approximately $800.

3.  Lease   operating  costs  and  production  taxes  were  1%  lower,   or
    approximately $700 less during the quarter ended September 30, 1998  as
    compared to the quarter ended September 30, 1997.

Costs and Expenses

Total costs and expenses decreased to $32,844 from $37,181 for the quarters
ended  September 30, 1998 and 1997, respectively, a decrease of  12%.   The
decrease is the result of lower depletion expense, partially offset  by  an
increase in general and administrative expense and.

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
    20% or approximately $3,700 during the quarter ended September 30, 1998
    as  compared to the quarter ended September 30, 1997.  The increase  in
    general  and administrative costs are due largely to higher  accounting
    fees.   The  10-Q's  are  now  required to be  reviewed  based  on  new
    accounting pronouncements.

2.  Depletion  expense decreased to $11,000 for the quarter ended September
    30,  1998 from $19,000 for the same period in 1997.  This represents  a
    decrease  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.   Contributing
    factor  to  the  decline in depletion expense between  the  comparative
    periods were the decrease in the price of oil, and thus the decline  in
    gross oil and gas revenues.

<PAGE>

B.   General Comparison of the Nine Month Periods Ended September 30,  1998
and 1997

The  following  table  provides certain information  regarding  performance
factors for the nine month periods ended September 30, 1998 and 1997:

                                                 Nine Months
                                                    Ended        Percentage
                                                September 30,     Increase
                                                1998      1997   (Decrease)
                                                ----      ----   ---------
Average price per barrel of oil            $   13.33     19.47    (32%)
Average price per mcf of gas               $    2.07      2.55    (19%)
Oil production in barrels                     37,300    37,200        -
Gas production in mcf                         39,300    41,800     (6%)
Income from net profits interests          $ 170,531   441,902    (61%)
Partnership distributions                  $ 288,320   473,000    (51%)
Limited partner distributions              $ 207,320   425,700    (51%)
Per unit distribution to limited partners  $   20.43     41.95    (51%)
Number of limited partner units               10,147    10,147

Revenues

The  Partnership's income from net profits interests decreased to  $170,531
from  $441,902  for  the nine months ended September  30,  1998  and  1997,
respectively,  a  decrease  of 61%.  The principal  factors  affecting  the
comparison  of  the nine months ended September 30, 1998 and  1997  are  as
follows:

1.  The  average  price  for a barrel of oil received  by  the  Partnership
    decreased  during the nine months ended September 30, 1998 as  compared
    to  the  nine  months ended September 30, 1997 by  32%,  or  $6.14  per
    barrel,  resulting  in a decrease of approximately $228,400  in  income
    from net profits interests.  Oil sales represented 86% of total oil and
    gas  sales during the nine months ended September 30, 1998 as  compared
    to 87% during the nine months ended September 30, 1997.

    The  average  price  for  an  mcf of gas received  by  the  Partnership
    decreased during the same period by 19%, or $.48 per mcf, resulting  in
    a  decrease  of  approximately  $20,100  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
    $248,500.  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  increased approximately 100 barrels  or  less  than  1%
   during the nine months ended September 30, 1998 as compared to the  nine
   months   ended  September  30,  1997,  resulting  in  an   increase   of
   approximately $1,300 in income from net profits interests.

    Gas  production decreased approximately 2,500 mcf or 6% during the same
    period, resulting in a decrease of approximately $5,200 in income  from
    net profits interests.

    The  net total decrease in income from net profits interests due to the
    change in production is approximately $3,900.

3.  Lease  operating  costs  and  production  taxes  were  5%  higher,   or
    approximately  $18,900 more during the nine months ended September  30,
    1998 as compared to the nine months ended September 30, 1997.

Costs and Expenses

Total  costs and expenses increased to $174,833 from $127,608 for the  nine
months ended September 30, 1998 and 1997, respectively, an increase of 37%.
The increase is the result of higher 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  increased
    13%  or approximately $8,200 during the nine months ended September 30,
    1998 as compared to the nine months ended September 30, 1997.

2.  Depletion  expense  increased to $104,000 for  the  nine  months  ended
    September  30,  1998 from $65,000 for the same period  in  1997.   This
    represents an increase of 60%.  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  used  to
    determine the Partnership's reserves for October 1, 1998 as compared to
    January  1,  1997 and the decline in gross oil and gas  revenues.   The
    decrease in price has also dropped the basis of the reserves because of
    the negative economics on some wells.

<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 $193,700  in
the  nine  months  ended  September 30, 1998 as compared  to  approximately
$467,400  in the nine months ended September 30, 1997.  The primary  source
of the 1998 cash flow from operating activities was profitable operations.

Cash  flows provided by investing activities were approximately $52,200  in
the  nine  months  ended  September 30, 1998.  There  were  no  cash  flows
provided  by  investing activities in the nine months ended  September  30,
1997.

Cash flows used in financing activities were approximately $228,000 in  the
nine  months ended September 30, 1998 as compared to approximately $472,900
in  the  nine  months ended September 30, 1997.  The only use in  financing
activities was the distributions to partners.

Total  distributions during the nine months ended September 30,  1998  were
$228,320  of  which  $207,320 was distributed to the limited  partners  and
$21,000  to  the  general partners.  The per unit distribution  to  limited
partners during the nine months ended September 30, 1998 was $20.43.  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.

The  sources  for  the  1998 distributions of $228,320  were  oil  and  gas
operations  of  approximately $193,700 and the change in the  oil  and  gas
properties  of  $52,200,  resulting in excess  cash  for  contingencies  or
subsequent  distributions.   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.

Since  inception of the Partnership, cumulative monthly cash  distributions
of  $5,569,435 have been made to the partners.  As of September  30,  1998,
$5,032,761 or $495.99 per limited partner unit has been distributed to  the
limited partners, representing a 99% return of the capital contributed.

As  of  September  30, 1998, the Partnership had approximately  $51,600  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>

Information Systems for the Year 2000

The  Partnership  relies  on the Managing General Partner  for  their  data
processing  requirements.   This includes use of  a  program  designed  and
implemented  by Midland Southwest Software, the Managing General  Partner's
software subsidiary.  Midland Southwest Software currently has a year  2000
plan  in  effect.   They have surveyed existing programs and  hardware  and
estimate a compliance date of early 1999.  Determination of the total  cost
in connection with the year 2000 compliance issue is difficult to determine
due  to the fact that they are in the process of developing their new  1998
version  of  marketed  oil  and gas software, which  has,  from  inception,
included  year 2000 compliance.  Third party software programs utilized  by
the  Managing General Partner are either in compliance or are not  affected
by  the  year  2000,  with the exception of the payroll service,  which  is
currently modifying its system to accurately handle the Year 2000 issue.

The  Managing  General  Partner has not completed  its  evaluation  of  its
vendors  or  suppliers systems to determine the effect, if  any,  the  non-
compliance  of  such systems would have on the operations of  the  Managing
General  Partner.  Plans are under way to perform an audit in late 1998  or
early  1999  to determine the effect of non-compliance of its  vendors  and
suppliers  on the Managing General Partner and thus formulate a contingency
plan.

A  potential source of risk includes, but is not limited to, the  inability
of  principal  purchasers and suppliers to be year  2000  compliant,  which
could  have a material effect on the Managing General Partner's production,
cash  flow  and overall financial condition, notwithstanding  the  Managing
General  Partner's  actions to prepare its own  information  systems.   The
Managing  General  Partner currently does not have a  contingency  plan  in
place to cover any unforeseen problems encountered that relate to the  year
2000, but intends to produce one before the end of the fiscal year.


<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, 1998

<PAGE>