SECURITIES AND EXCHANGE COMMISSION

                     Washington, D.C.  20549


                         AMENDMENT NO. 3

                               TO

                          SCHEDULE 13D


            Under the Securities Exchange Act of 1934

    Southwest Royalties Institutional Income Fund VII-B, L.P.
                        (Name of Issuer)


                  Limited Partnership Interests 
                 (Title of Class of Securities)


                         Not Applicable 
                         (CUSIP Number)




     Check the following box if a fee is being paid with this
statement.     [ ___ ]  (A fee is not required only if the filing
person:  (1) has a previous statement on file reporting beneficial
ownership of more than five percent of the class of securities
described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of
such class.)  (See Rule 13d-7).




                    CUSIP No. Not Applicable

 (1) Names of Reporting Persons         Southwest Royalties, Inc.
     S.S. or I.R.S. Identification           75-1917432
     Nos. of Above Persons

 (2) Check the Appropriate Box               (a)
     if a Member of a Group                  (b)  X

 (3) SEC Use Only

 (4) Source of Funds                         WC

 (5) Check if Disclosure of Legal
     Proceedings is Required
     Pursuant to Items 2(d) or 2(e)          Not Applicable

 (6) Citizenship or Place of
     Organization                            Delaware corporation


Number of Shares/Units Beneficially Owned by Each Reporting Person
With:


 (7) Sole Voting Power                       1,373.50 Units

 (8) Share Voting Power                      None

 (9) Sole Dispositive Power                  1,373.50 Units

(10) Shared Dispositive Power                None

(11) Aggregate Amount Beneficially
     Owned by Each Reporting Person          1,373.50 Units

(12) Check if the Aggregate Amount
     in Row (11) Excludes Certain
     Shares                                  Not Applicable

(13) Percent of Class Represented
     by Amount in Row (11)                   9.2% of class of 
                                             15,000 Units

(14) Type of Reporting Person                CO (Managing General
                                             Partner of Issuer)




Item 1.   Type of Security:             Limited Partnership
                                        Interests ("Units")

          Name of Issuer:               Southwest Royalties
                                        Institutional Income Fund
                                        VII-B, L.P. 

          Address of Issuer's           407 N. Big Spring St.
          Principal Executive           Suite 300
          Offices:                      Midland, Texas  79701-4326

Item 2(a).     Name of Person
               Filing:                  Southwest Royalties, Inc.

Item 2(b).     Address of Principal     407 N. Big Spring St.
               Business Office:         Midland, Texas  79701-4326

Item 2(c).     Present Occupation:      Not Applicable

Item 2(d).     Criminal Convictions:    None

Item 2(e).     Civil Securities Laws
               Injunctions or 
               Prohibitions:            None

Item 2(f).     Citizenship:             Delaware, U.S.A.

Item 3.        Source of Funds:         Working capital of the
                                        Reporting Person.

Item 4.        Purpose of Transactions:

     Satisfied requirements of the Right of Presentment contained
     in the Issuer's Agreement of Limited Partnership whereby the
     Reporting Person, as Managing General Partner, agrees to
     acquire Units from limited partners seeking an exit from the
     Issuer at a formula price.



Item 5.        Interest in Securities             

     The Reporting Person, which is the Issuer: Managing General
     Partner of the Issuer, holds a total of 1,373.50 Units of
     limited partnership interests over which it has sole voting
     and dispositive powers.  These Units represent 9.2% of the
     total 15,000 Units which are issued and outstanding.  The
     purchase transactions which resulted in the ownership of the
     Reporting Person increasing from 8.1% to 9.2% occurred between 
     January 1, 1997 and September 30, 1997 when the Reporting
     Person purchased an additional 162 Units as part of the
     Issuer's Right of Presentment program.  The price per unit
     ranged from $164.60 to $170.99. 

Item 6.   Contracts, Arrangements,
          Undertakings or Relationships
          with Respect to Securities of
          the Issuer:                        Not Applicable

Item 7.   Material to Be Filed as 
          Exhibits:                          Not Applicable




                            SIGNATURE


     After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.





Date: October 2, 1997              By:  /s/ Bill E. Coggin                 
                                        Bill E. Coggin,
                                        Vice-President
                                        Southwest Royalties, Inc.