We propose to generate Einstein-Podolsky-Rosen (EPR) entanglement between groups of atoms in a two-well Bose-Einstein condensate using a dynamical process similar to that employed in quantum optics. A local nonlinear S-wave scattering interaction has the effect of creating spin squeezing at each well, while a tunneling coupling, analogous to a beam splitter in optics, introduces an interference between these fields that causes interwell entanglement. We consider two internal modes at each well so that the entanglement can be detected by measuring a reduction in the variances of the sums of local Schwinger spin observables. As is typical of continuous variable (CV) entanglement, the entanglement is predicted to increase with atom number. It becomes sufficiently strong at higher numbers of atoms so that the EPR paradox and steering nonlocality can be realized. The entanglement is predicted using an analytical approach and, for larger atom numbers, using stochastic simulations based on a truncated Wigner function approximation. We find generally that strong tunneling is favorable, and that entanglement persists and is even enhanced in the presence of realistic nonlinear losses.