Errors in the outer zone contribution to oceanic undulation differences computed from a finite set of potential coefficients based on satellite measurements of gravity anomalies and gravity disturbances are analyzed. Equations are derived for the truncation errors resulting from the lack of high-degree coefficients and the commission errors arising from errors in the available lower-degree coefficients, and it is assumed that the inner zone (spherical cap) is sufficiently covered by surface gravity measurements in conjunction with altimetry or by gravity anomaly data. Numerical computations of error for various observational conditions reveal undulation difference errors ranging from 13 to 15 cm and from 6 to 36 cm in the cases of gravity anomaly and gravity disturbance data, respectively for a cap radius of 10 deg and mean anomalies accurate to 10 mgal, with a reduction of errors in both cases to less than 10 cm as mean anomaly accuracy is increased to 1 mgal. In the absence of a spherical cap, both cases yield error estimates of 68 cm for an accuracy of 1 mgal and between 93 and 160 cm for the lesser accuracy, which can be reduced to about 110 cm by the introduction of a perfect 30-deg reference field.